Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

DUMBARTON DISTRICT COUNCIL ORDER CONFIRMATION BILL

GREATER GLASGOW PASSENGER TRANSPORT ORDER CONFIRMATION BILL

KILMARNOCK AND LOUDOUN DISTRICT COUNCIL ORDER CONFIRMATION BILL

SCOTS EPISCOPAL FUND ORDER CONFIRMATION BILL

STIRLING DISTRICT COUNCIL ORDER CONFIRMATION BILL

Orders for Third Readings read. To be read the Third time upon Thursday.

Oral Answers to Questions — ORAL ANSWERS TO QUESTIONS

Mr. Speaker: I remind the House that Question Time has been more effective since hon. Members, when they are called, have tried to ask one supplementary question only instead of a series.

EDUCATION AND SCIENCE

School Transport

Mr. Hooson: asked the Secretary of State for Education and Science what guidance he intends to give rural education authorities regarding transport to schools.

The Under-Secretary of State for Education and Science (Mr. Neil Macfarlane): My right hon. and learned Friend will consider what guidance may be necessary in the light of the discussion of our legislative proposals.

Mr. Hooson: Will my hon. Friend bear in mind that rural education authorities share an exceptional responsibility for transporting children over rural distances to schools? Will he study means of recognising the extra transport costs that they have to incur?

Mr. Macfarlane: I take full note of my hon. Friend's remarks. My right hon. and learned Friend has recognised the problem which has been special to rural areas for some considerable time. They often have inadequate public transport. For that reason, the local education authorities will still, in effect, be required to provide transport for children attending the appropriate school and living beyond the statutory walking distance. Recognising the problems of the rural areas is all part and parcel of our approach for the next few months. Their problems will be kept under review by the Department.

Mr. Beith: Does the Minister expect those rural counties that are unable to meet the full savings that he has asked for from transport to make an equivalent saving in other areas of education?

Mr. Macfarlane: It is up to the local authorities to decide how to make the full saving. None the less, the House must be


fully aware that, although we are expecting savings to be made in the next financial year of about 15 per cent.—in other words, near £20 million out of a total cost of £125 million—there is still a sizeable and substantial subsidy available for school transport.

Dr. John Cunningham: Is the Under-Secretary aware that in areas such as Cumbria there is no alternative to the local education authority providing transport to take children to school? Far from there being any leeway, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) has observed, the reality is that, because of energy and other costs, the cost of providing school transport will increase and there will be no opportunity to make savings—quite the reverse.

Mr. Macfarlane: At the risk of covering old ground, I must tell the hon. Gentleman that the Bill which is currently in Committee—albeit making slow progress—is not intended to remove the existing provisions. Many anomalies exist and the hon. Gentleman will know what those anomalies are within the term "three-mile limit". I assure the House that it is our intention to maintain the closest review as the legislative proposals are discussed by each local education authority.

Mr. Cormack: Does my hon. Friend accept that anxiety is mounting in rural areas, especially among parents whose children attend denominational schools? Does he accept also that, as a number of rural schools will probably be closed in an effort to rationalise and to save money, many parents will face even greater burdens than they have had to face in the past?

Mr. Macfarlane: Where children are affected by school closures, the local education authorities will continue to be able to offer transport to displaced children. When that happens, they will in general be able to charge for doing so. My hon. Friend referred to another problem that is based upon a large degree of misunderstanding. In the present proposals that are currently in Committee and making somewhat measured progress, there is nothing which is discriminatory.

Mrs. Ann Taylor: Does the Minister realise that the provisions in the Education (No. 2) Bill make a mockery of all

that the Minister says about parental choice in education? Many parents will not have any choice because they will not be able to afford to pay bus fares to send their children to schools some distance from their homes? Will he explain why the provisions for school transport are in the Bill if they are not to facilitate public expenditure cuts?

Mr. Macfarlane: They are most certainly in the Bill to enforce public expenditure savings. The hon. Lady talks about the provisions in the Bill being a mockery, but she should consider the position in her constituency. If she does, she will find many mockeries already within the two and three-mile limits. For example, there is the poor family living within the two and three-mile limits that receives no assistance and the better-off family living outside the limit that receives assistance.

School Closures

Dr. Edmund Marshall: asked the Secretary of State for Education and Science whether he considers proposals to cease to maintain local education authority schools on social and educational, as well as economic, grounds.

The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): Yes, Sir. My right hon. and learned Friend also takes into account all other relevant factors.

Dr. Marshall: Local education authorities are under great pressure from central Government to reduce expenditure. Does the hon. Gentleman appreciate that many of the current proposals for school closures are based purely on economic grounds, so that the Secretary of State's consideration of the proposals on social and education grounds will lead almost necessarily to a high rate of reprieves?

Dr. Boyson: The hon. Gentleman must realise that there has been a great fall in the birth rate and in the number of children in our schools. By 1986 there will be a fall if 24 per cent. in the number of children attending primary schools. By 1991 there will be a fall of 30 per cent. in the number attending secondary schools. In many instances small schools mean fewer opportunities for pupils. Nevertheless, when a section 13 notice is published to close a school, the Secretary of


State will examine the proposal along with the objections, bearing in mind choice of school, parental wishes, denomination, and the availability of single or mixed schools.

Mr. Forman: May we take it from what my hon. Friend has said that there are often good education reasons for closing schools and ensuring that the available facilities in the education service are concentrated where they can be most effective?

Dr. Boyson: I am grateful to my hon. Friend for asking that supplementary question. There is no doubt that at fifth form and sixth form levels it is essential that there are viable pupil levels on not only economic grounds but to encourage children to talk to one another and to develop their courses. Since the change of Government, it has been agreed to close only 22 primary schools and 10 secondary schools. At the same time, section 13 notices on one primary school and one secondary school have been rejected.

Mr. Christopher Price: Does the hon. Gentleman remember that in the Tame-side case the courts felt themselves competent to consider, and to go through, the reasons in the Minister's mind when he made decisions of that sort? Is he aware that if it is suspected that those reasons are—as they clearly are in many instances—purely economic reasons and not education reasons, he might run into great trouble when he is taken to court by local authorities?

Dr. Boyson: As it is the local authorities that make application, obviously they will consider both economic and education reasons. Those reasons will be taken into account by the Secretary of State. Any decision that is taken subsequently will be up to those who take it.

Universities (Funding)

Mr. Frank Allaun: asked the Secretary of State for Education and Science what representations he has received over the future funding of universities.

The Secretary of State for Education and Science (Mr. Mark Carlisle): I have received representations from the Committee of Vice-Chancellors and Principals, the Trades Union Congress, the National Association of Teachers in Further and Higher Education and from some 100

other organisations. In addition, I have received about 150 letters from individuals.

Mr. Allaun: Will universities be permitted to offer home students places left vacant by overseas students? Will the right hon. and learned Gentleman estimate approximately the shortfall of overseas students in 1980 compared with this year and the resulting loss of funding to universities?

Mr. Carlisle: Admissions are for universities. Funding will be determined on the basis of the assumed number of home students. The answer to the hon. Gentleman's question must be "No". The universities will not receive additional funding for additional home students on top of that which is the basis of the calculation. I am not in a position to give any answer to the hon. Gentleman's question about the likely number of foreign students coming to this country next year. Over the past 10 years the number of overseas students coming to Britain has almost trebled.

Dr. Hampson: Does my right hon. and learned Friend recall the damage that was done to universities by Labour Ministers' procrastinations in handling the university teachers' pay award in 1974? Why is there such a delay in dealing with the proposals of the Association of University Teachers at present?

Mr. Carlisle: With great respect, there is not all that much delay. The university teachers' pay award should have been payable from 1 October 1979. It is true that discussions are still taking place between the parties. It is hoped to call a meeting of the relevant committee in the near future. The university teachers' pay award last year was not settled until some time in the spring of this year.

Mr. Ashley: Does the Secretary of State know that one of the most remarkable side effects of reduced funding of universities because of the method of charging overseas students is to damage some medical research institutes and to destroy some others? If that was not intended, and I assume that it was not, will the right hon. and learned Gentleman consult his right hon. Friend the Secretary of State for Social Services and inquire into the implications for medical research?

Mr. Carlisle: I do not accept the right hon. Gentleman's argument. However, if there is any issue that he wishes me to consider in the area to which he refers, I shall do so. As the House will know, I have made it clear that we intend to make available certain bursaries for post-graduate research students.

Overseas Students

Mr. van Straubenzee: asked the Secretary of State for Education and Science whether the number of overseas students in England and Wales increased, and if so by how much, on each of the last two occasions on which tuition fees for overseas students were raised.

Dr. Boyson: Figures for England and Wales are not readily available, but in Great Britain overseas student numbers increased both in 1976–77 and 1977–78—the last two academic years with significant increases in tuition fees for which statistics are available. In 1976–77 the fee increase was 30 per cent. and the increase in student numbers nearly 11 per cent. In 1977–78 fee increases ranged from 40 per cent to over 100 per cent. while student numbers increased by nearly 4 per cent.

Mr. van Straubenzee: Do not the figures show how unwise it is for those, amongst whom I certainly count myself, with a continuing commitment to overseas students coming to our places of higher education to make the certain forecast that numbers will fall dramatically? Will my hon. Friend take the opportunity of the considerable increase now being made to consult other Ministers to ascertain whether we can now evolve a different system that will differentiate country by country in a far more sophisticated manner than anything we have at present?

Dr. Boyson: I am grateful for that suggestion. We shall consult other Ministers and those interested in foreign students coming to this country. It is as well to remember that we have already developed a scheme to provide bursaries to enable the most able research students to come here without paying any more than students from within this country. We are considering what modifications may be made to encourage EEC students to come here. The FCO and the ODA will continue to fund students from under-developed countries.

Mr. Kinnock: Does the hon. Gentleman agree that the figures are not meaningful as no Government previously have ever proposed full-cost fees for overseas students? Is he aware that the education institutions and their representative bodies from the Committee of Vice-Chancellors to every other sphere are unanimous that the increased fees that are proposed will jeopardise the very existence of important courses, will represent a major breach of faith with the Third world and poor students and will have immense economic and cultural implications for Britain's relations with much of the remainder of the world?

Dr. Boyson: It is as well to remember from where the students are coming. Over one-quarter are coming from countries whose per capita income is higher than the average per capita income in Britain. In many other cases the students come from families whose average incomes are well ahead of that in this country. In many cases it is possible that all we are doing—I am sure that the hon. Gentleman does not agree—is taking the elite from those countries, not necessarily those from the poorest areas.
The Labour Government first brought in differential fees in 1967–68 and increased them five times over during their time in office. They funded universities, polytechnics and colleges of higher and further education to take in 72,000 students last year. There was a total of 87,000 students taken in. Therefore, 15,000 students were not paid for by the Government. Year after year, by means of the quota method, the Labour Government tried to reduce their numbers. We have tried to reduce the number to no lower than that intended by the previous Government.

Mr. Crouch: Is my hon. Friend aware of the concern expressed by vice-chancellors and principals on the effect of the structure of university courses as a result of the rise in overseas students' fees? Will he therefore consider operating the scheme at least on a trial basis, as it were, to test the market?

Dr. Boyson: Obviously we shall watch what happens next year with the recruitment. The figures indicate at the moment that there is only a 5 per cent. to 8 per cent. decline in applications from overseas students, despite the fact that this


year there were four times as many applications as students taken in. It is as well to remember that the British first degree course is the most intensive, possibly one of the most expensive but one of the most efficient in the world. Compared with other countries where there are five-year and six-year degree courses, to come here for three years, even at these fees, is a very economic investment.

Mr. Flannery: Will the hon. Gentleman stop trying to make a virtue out of something which is inherently evil? Does he not realise that, despite the laughter of the well-heeled hon. Ladies and hon. Gentlemen on the Government Benches, the reality is that many of the students are about to be cut off in midcourse? They are in great difficulty. We are already receiving letters from them. [Interruption.] It is no good telling us that they are not in difficulty. I am more than eager that the hon. Gentleman should give me the answer. How would we feel if we were cut off in mid-course in the midst of our studies?

Dr. Boyson: I am sure that none of us would ever want the hon. Member for Sheffield, Hillsborough (Mr. Flannery) to be cut off in mid-course, although others wish that he had been cut off at an earlier stage.
Next year's increase to an economic fee applies only to students joining next year. We said that we would not increase beyond the inflation rate the fees of those who were already here. Therefore, those who wrote to the hon. Member must have misunderstood the position. I hope that he will now explain to them what is the situation.
The expenditure on foreign students was £120 million. Much of that was funded not just by university graduates in this country through their taxes but by many of our 16-year-olds who never had the chance to go to university.

Mr. Speaker: This question will come up again later.

School Meals

Dr. Mawhinney: asked the Secretary of State for Education and Science whether he intends to authorise an increase in the cost, to parents, of school meals before the Education (No. 2) Bill becomes law.

Mr. Mark Carlisle: I have no plans to do so at present.

Dr. Mawhinney: Does my right hon. and learned Friend accept that many Government supporters wish local authorities to cut back on their expenditure, but that if he increases school meal fees prior to the Bill becoming law, many of them will have an excuse not to take a stringent look at their expenditure in a way in which they would have to if the school meal charge were retained at 30p?

Mr. Carlisle: I am grateful for what my hon. Friend said. Our desire is to get the Education (No. 2) Bill through in time to allow local authorities to have freedom for the whole of the next financial year to decide what they consider to be the most appropriate ways of saving money in the area of school meals.

Mr. Gwilym Roberts: Does the right hon. and learned Gentleman accept that the cost of this Government to parents is terrible, anyway, and that we, at least, appreciate this small crumb from his table? Will he now reconsider the proposals in the Bill? The only effect of the Bill will be to make school meals either prohibitive in cost for the great mass of working class children or unobtainable.

Mr. Carlisle: I certainly do not accept what the hon. Gentleman said. What would be terrible would be if the Government failed to attempt to take control over public expenditure, which would have serious effects on the future economy of this country.

School Buildings (Durham)

Mr. David Watkins: asked the Secretary of State for Education and Science if he will make additional funds available to improve sub-standard school buildings in County Durham.

Mr. Macfarlane: The school building allocations for Durham for 1979–80 and 1980–81 total nearly £2 million. It is open to the authority to make a bid for additional resources, but I cannot promise at this stage any increase in its allocation.

Mr. Watkins: Is the Minister aware that there are some schools in county Durham where both teachers and pupils


are making what can only be described as heroic efforts in appalling conditions? I instance the schools at Benfieldside and Consett, in my constituency. Is he aware that it is only by the provision of additional funds that the buildings can possibly be brought up to any kind of reasonable standard?

Mr. Macfarlane: So far, we in the Department have not received any further bids for any further expenditure. Although I have to tell the hon. Gentleman that it is very much a matter for the local authority, I fear that, if he has any deep seated anxiety about it, he should write to the Department about it right away and I shall look into it.

Mr. Armstrong: Will the Minister bear in mind that the roofs-over-heads policy, which has been pursued by successive Governments, has hit Durham county very hard, as the school population there has been static, and indeed has diminished in some areas as a result of migration. Therefore, it has suffered as a result of the lack of resources. When he receives the extra demand for resources, as he indicated in his answer to my hon. Friend, will he give favourable consideration to it?

Mr. Macfarlane: I think that that largely depends upon our individual interpretation of "favourable consideration". I obviously cannot promise—as the right hon. Gentleman fully understands—any definite increase. Capital programmes cannot be exempted from the general need to stabilise public expenditure. I understand that in Durham the rolls in secondary education do not begin to fall until the end of the mid-1980s, if I may phrase it like that. Certainly, every bid which is received from any education authority will be reviewed accordingly. However, I cannot give any positive assurance here and now.

Student Fees

Mr. Christopher Price: asked the Secretary of State for Education and Science how many representations he has received about the proposed increases in overseas student fees.

Dr. Boyson: My right hon. and learned Friend has received about 140 such representations since Government policy in this matter was first announced on 1 November.

Mr. Price: Will the Minister expand on the remarks he made the other day when he gave the revolution in Iran as the principal reason why the Government were following this policy? Is he saying that the vice-chancellors are lying when they say that the policy will destroy technology courses for home students—or is he saying that "Big Brother knows best"?

Dr. Boyson: I am grateful to the hon. Member for Lewisham, West (Mr. Price) for drawing my attention to the speech I made this past weekend. I said that in two out of three countries from which we had taken most foreign students in the past 10 years—that is, Iran and Nigeria—it did not appear that great political ill will had been built up. I am sure that all Members agree that in the cases of Iran and Nigeria the argument about the investment in political good will was not the best that could be made.

Mr. Chapman: Notwithstanding what my hon. Friend said, will he look sympathetically at the plight of some Iranian students whose ability to continue with their courses here is threatened by their inability to draw funds from Iran due to the recent political upheavals? Will he look into the possibility of a temporary bridging loan for them or some other financial help?

Dr. Boyson: I appreciate that there are problems of Iranian students here. We are prepared to look at the matter and discuss it with the Foreign and Commonwealth Office and university vice-chancellors.

Mr. Robert Hughes: Will the Minister say by how much fees will be increased for students already at universities and colleges in this country? Will he give an undertaking that no student already in this country will fail to complete his course because there are insufficient funds available to meet the increases, and say how the Government intend to carry out that undertaking?

Dr. Boyson: Concerning the first point, in my answer to the hon. Member for Sheffield, Hillsborough (Mr. Flannery) I made it clear that the increase in the level of economic fees will apply only to students enrolled from next September. We have said that any increase to students already on courses will be made to match


inflation, so I can give an assurance on the hon. Member's first point. As for writing a blank cheque covering every student from anywhere in the world, whatever the problems are, no Government can do that.

School Transport

Mr. Whitehead: asked the Secretary of State for Education and Science how many representations he has received concerning the decision to cut back on free school transport and how many have been in support of his proposals.

Mr. Macfarlane: About 3,200 letters have been received, almost all opposing—in similar terms—any change in the law. But local authority associations and a number of individual local education authorities have expressed their support for removal of the inflexible requirement that where an authority provides transport it must be provided free.

Mr. Whitehead: Does not the hon. Member see that those 3,200 letters are 3,200 reasons why there is great public outrage at the removal of free school transport under section 23? Does he not agree that this is a violation of all the undertakings given to denominational schools under the 1944 Act? Will the hon. Gentleman take it from me that, in the largest Catholic secondary school in my constituency, over half the pupils are dependent upon free school transport? What is he going to say to the parents of those children, since these measures will prevent them from sending their children to the school of their choice?

Mr. Macfarlane: I do not believe that the hon. Member for Derby, North (Mr. Whitehead) was here when we developed this question earlier. I will go over it for his benefit. Of those 3,200 letters, at least two-thirds were representations from persons writing as members of the Roman Catholic Church. I understand their anxieties, but I cannot agree with the hon. Member when he says there is deep public outrage. I do not believe that that is the case. What I believe—and I think that it is worth taking up the time of the House in order to explain it—is that there has been a degree of misunderstanding. The issue is one of how local education authorities might decide to use their new powers to charge. There is no statutory requirement on local

authorities under the Education Act 1944 to provide free transport for children attending a denominational school unless there is no nearer appropriate school. All I can say is that my right hon. and learned Friend will keep the matter under review as the legislative proposals develop.

Mrs. Kellett-Bowman: Bearing in mind the extreme unfairness of the present "all or nothing" approach, which bears no relationship to the danger of a journey, does not my hon. Friend agree that it would be much fairer to have a flat rate of, say, 10p per journey, or £1 a week, which would increase choice rather than diminish it?

Mr. Macfarlane: My hon. Friend raises an important point. This is something which may be considered in Committee. It is up to each local education authority to determine what it wishes to do.

Mr. Roy Hughes: Does the Minister appreciate that his proposals are causing considerable consternation among governing bodies not only of Catholic schools but of bilingual schools which have large catchment areas? It is working-class parents who, very often, are potentially affected. Will the Minister reconsider his proposal?

Mr. Macfarlane: If the hon. Member wishes to convey anything to my right hon. and learned Friend, it would of course form part and parcel of the review during the next couple of months.

Mr. Sainsbury: Does not my hon. Friend agree that it is an anomaly that, of two children waiting at the same place, one can be taken free on the school bus and the other must pay to travel on public transport, merely because their homes are 100 metres or so apart? Would it not be much more sensible to give local authorities the discretion that the Government intends?

Mr. Macfarlane: Yes. I fully agree with my hon. Friend and I am grateful for his remarks. I suspect that his observations are shared by most hon. Members in all quarters of this House.

Universities (Engineering and Mining Departments)

Mr Dalyell: asked the Secretary of State for Education and Science what


assessment he has made of the effect on departments of engineering and mining in universities of his decision to raise substantially the contribution of overseas students.

Dr. Boyson: Some fall in the total of overseas students is expected in the academic year 1980–81, but it is not possible to predict accurately how this will affect individual institutions, departments or subjects. My Department, with the help of the University Grants Committee, will keep a close watch on developments.

Mr. Dalyell: Could we hark back to the second question asked by my hon. Friend the Member for Lewisham, West (Mr. Price)? The Minister, inadvertently no doubt, did not reply to it. Is the Mininster saying—I do not wish to use the word "lying"—that the vice-chancellors and the engineering and mining departments are making a fuss about nothing? Is that the Government's attitude?

Dr. Boyson: Since we do not know how many foreign students, irrespective of their discipline, will be applying next September, it is rather early to be talking about a critical effect upon universities. If one refers particularly to the point raised by the hon. Member for West Lothian (Mr. Dalyell), it is as well to remember that between 1971 and 1977 there was a drop in the number of home undergraduates on technology and engineering courses, while the number of incoming foreign students almost trebled. Over those six years there has been a one-third drop in the number of postgraduate home students and an increase of nearly 65 per cent. in foreign students. We now have more foreign students than home students on postgraduate technology and engineering courses. Although British universities have an international aspect, they are British institutions funded by this country, and we should be particularly concerned about the take-up of engineering and technological courses for British students.

Mr. van Straubenzee: Is it not a fact—curious though it may seem—that many vice-chancellors display a sense of being scared of the students over whom they preside? Does not that tend to lead them to be over-enthusiastic in joining student campaigns and so seeking to

demonstrate that they are more Catholic than the Pope?

Dr. Boyson: It is difficult to add to that splendid observation made, by way of a question, by my hon. Friend. I entirely agree with him. It seems to me that the dog has barked even before it has seen the bone, or even before the bone has been taken away. It might as well wait and see what the situation is next year. It seems odd that, where there has been a threat of minor disorder in universities, the vice-chancellors have been immediately affected with it in their academic speeches.

Mr. Dalyell: On a point of order, Mr. Speaker. I give notice that I intend to bark about this matter on the Adjournment.

Association of Metropolitan Authorities (Education Committee)

Mr. John Evans: asked the Secretary of State for Education and Science when next he expects to meet the Association of Metropolitan Authorities' Education Committee.

Mr. Mark Carlisle: I have no plans to do so at the moment, but I have regular discussions with the Association of Metropolitan Authorities and the Association of County Councils.

Mr. Evans: Will the Secretary of State concede that, from his discussions with the AMA, opposition to his assisted places schemes is now spreading from the Benches behind him to Conservative members of the AMA because he has totally ignored their view that this scheme is socially divisive?

Mr. Carlisle: I do not accept that. The AMA has made it quite clear that it recognises that we are committed to this scheme. We made it clear that I propose to discuss it with the local education authorities.

Mr. Sever: Will the Secretary of State indicate when he next meets the AMA how he expects to bring a lot of inner-city urban area schools up to standard in the coming financial year?

Mr. Carlisle: The question of individual schools being brought up to standard is a matter for the AMA. What is quite clear is that, in the city areas.


where there have been substantial decreases in the number of children of school age, there is bound to be a certain number of closures of older schools.

School Closures

Mr. Beith: asked the Secretary of State for Education and Science what is his estimate of the number of schools that will have to be closed or merged as a necessary part of the Government's economies in education.

Mr. Mark Carlisle: The Government's expenditure plans set out in the White Paper, Cmnd. 7746, assume that about 750,000 school places will be taken out of use by 1982–83. Of these about 550,000 are expected to be in primary schools and 200,000 in secondary schools, and two-thirds of the total is expected to be in temporary accommodation. While it is not possible with accuracy to translate places taken out of use into school closures, we have been assuming therefore that over 1,000 schools will close.

Mr. Beith: Does not that include an awful lot of village schools? Ought not the Government to be trying to retain village schools for their educational and social value? What is the Secretary of State going to say to the parents of children in those schools about transport costs?

Mr. Carlisle: Many village schools in rural areas have been closed over the past two decades. I think that it is more likely that a greater proportion of future closures will be in urban areas.

Mr. Peter Bottomley: Will the Secretary of State confirm that the general election result in May this year had no effect on the birth rate 10 years ago, which is what determines the number of places?

Mr. Carlisle: My hon. Friend is correct. As I have said on various occasions, whatever happens to the birth rate from now on, the number of children in our secondary schools over the next 16 years is known. The figures show clearly that there will be a substantial drop.

Mr. Kinnock: Does the right hon. and learned Gentleman recall telling a press conference on 1 November that reports of threats to Oxfordshire's nursery schools were "exaggerated and sensational"? Has he taken on board the fact that last

week Oxfordshire county council announced that all its nursery school provision was to be shut down? Does he accept that the council may be in contravention of section 8 of the Education Act 1944? If it is, will he use his powers under section 99 to issue a default notice?

Mr. Carlisle: If the hon. Gentleman wishes me to answer that question, he should put it on the Order Paper. I said at that press conference that, for 1980–81, the Government have assumed in making their calculations of relevant expenditure for rate support grant purposes that expenditure on nursery education will remain approximately constant.

Mr. Kinnock: The right hon. and learned Gentleman specified Oxfordshire because that is the local education authority previously chaired by his noble Friend the Minister of State, Department of Education and Science. Will the right hon. and learned Gentleman use his powers under section 99?

Mr. Carlisle: No one has approached me or asked me to use my powers under section 99. If the hon. Gentleman wishes me to consider the matter and tables a question, I shall consider it.

Mr. Nicholas Winterton: Is my right hon. and learned Friend aware that village schools are often the centre of village activity and that when they are closed a valuable facility for rural communities is removed? Is my right hon. and learned Friend prepared to have a look at the somewhat superficial cost studies that have been produced by many local education authorities to justify the closure of village schools? Will he also take into account the problems created for many families who may in future have to pay for the transport of their children to school as a result of village school closures?

Mr. Carlisle: I recognise the force of what my hon. Friend has said. That is why, in answer to question No. 2, my hon. Friend the Under-Secretary made clear that I take into account social and educational factors, as well as economic factors, in considering every closure that comes to me.

Textbooks

Mr. William Hamilton: asked the Secretary of State for Education and


Science what proposals he has for improving the supply of textbooks in schools.

Mr. Macfarlane: The Government have made provision, nationally, for expenditure per pupil on schools' overall running costs, excluding teachers' salaries, which are dealt with separately, to be 2 per cent. higher in real terms in 1980–81, compared with last year.

Mr. Hamilton: Is the hon. Gentleman aware that some Tory-controlled education authorities have already decided to cut capitation expenditure on textbooks by no less than 30 per cent? Will he disapprove of that educational vandalism and publish a list of local education authorities that shows clearly what each intends to do in this area?

Mr. Macfarlane: I can give no guarantee that a list will be published. Over a number of years, far too many local education authorities and head teachers have spent money on equipment in schools that would have been better spent on school textbooks. It must grieve Labour Members to realise that between 1968 and 1978–79—when Labour Governments were in office for most of the time—spending per primary pupil declined from £5 to £4. For secondary school pupils, spending per head declined during that period from £11·7 to £7.

Mr. Gummer: Does my hon. Friend agree that, because the previous Government, when they made their cuts, refused to allow local education authorities any choice in the provision of school meals and transport, the one area that was really cut was the capitation grant on books?

Mr. Macfarlane: That was a strong feature of the previous Socialist Administration's policy during their five years in office. They funked most of those measures when they should have been facing reality.

Mr. Skinner: Is the Minister aware that the sum total of his proposals in the Education (No. 2) Bill and the result of his incitement of Tory councils to carry out those principal measures will be that kids will have to walk five miles to school and that, when they get there, they will be short of books? Is he aware that the Tory-controlled Derbyshire county council has said that it intends to close 14 libraries as well, so the children

will not be able to read books there either?

Mr. Macfarlane: Once again, I can only deduce that the hon. Member has not read the proposed legislation. That is, unhappily, an all too frequent hallmark of his behaviour in the House.

WEST YORKSHIRE

Mr. Cryer: asked the Prime Minister when she next proposes to visit West Yorkshire.

The Prime Minister (Mrs. Margaret Thatcher): I have at present no plans to do so.

Mr. Cryer: Does the Prime Minister agree that freedom of speech is important in West Yorkshire, as in the rest of the country? Will she condemn the wrecking tactics of British Leyland management in seeking to victimise a shop steward who has a different opinion from that of the management? Will she support the trade union leaders and workers who are taking action to defend freedom of speech in this country? Does she also agree that Michael Edwardes is becoming increasingly like the mole of British Leyland—wrecking the firm from within?

The Prime Minister: As the hon. Gentleman knows, these are matters for the management of British Leyland and not for me. I shall leave the management of British Leyland to the management.

PRIME MINISTER (ENGAGEMENTS)

Mr. Canavan: asked the Prime Minister whether she will list her official engagements for 20 November.

The Prime Minister: This morning I had further talks with President Giscard and we gave a joint press conference. In addition to my duties in the House, I shall be holding meetings with ministerial colleagues and others. This evening I hope to have an Audience of Her Majesty The Queen.

Mr. Canavan: While preparing for her speech tomorrow, will the Prime Minister find out whether the fact that a self-confessed traitor managed to find shelter for 14 years in the Royal Household was


known all along to the head of that household?

The Prime Minister: For reasons that I think that the hon. Gentleman and the whole House will understand, I prefer not to make any further comment today. We have a full debate tomorrow. The answer that I gave last Thursday was measured and considered and I should like anything else I say to have equal measurement and consideration.

Mr. Neubert: In the light of recent developments and Mr. Anthony Blunt's statement today, can my right hon. Friend say whether the Government have changed their attitude towards the Protection of Official Information Bill, which is in another place?

The Prime Minister: My right hon. Friend and I have had a certain amount of—[Interruption.] On our side, we do talk to one another. My right hon. Friend and I have discussed the future of the Protection of Official Information Bill and have decided that, with the leave of the House of Lords, it would be right for the Bill not to proceed further in the present circumstances.

Mr. Race: As the Prime Minister and her Ministers are so keen on telling us that we should all live within our means, will she accept my invitation to take a job for a week as a lavatory attendant, in order that she may see for herself what it means to live within one's means on a wage of £48·66 a week? If she accepts the invitation, will she report to the House how she managed her family budget over that week?

The Prime Minister: I scarcely think that the hon. Gentleman's question requires a deep answer. I am happy to continue in my present job, and to do it as well as I can without any increase in pay.

Mr. John Townend: Will my right hon. Friend find time today to send congratulations to President Sadat on his courageous action in offering asylum to the Shah of Iran? Will she, on behalf of the British Government, send a similar invitation?

The Prime Minister: As my hon. Friend knows, the situation in Iran is very grievous for the American hostages. We

have great sympathy for President Carter and admire the restraint with which he has dealt with this situation and his refusal to yield to blackmail. It would be unwise for us to go further than that.

Mr. Winnick: asked the Prime Minister if she will list her official engagements for Tuesday 20 November.

The Prime Minister: I refer the hon. Gentleman to the reply which I have just given.

Mr. Winnick: Is the right hon. Lady aware of the extreme unpopularity of her Administration as the economic crisis deepens and prices and charges go up constantly, to be followed by the further blow to mortgages next year? When will she have the courage to put Britain's interests before her own and resign her office?

The Prime Minister: I hope that one quality in which I am not lacking is courage. When hon. Members on both sides of the House give their support to enabling the nation to live within its means, which includes enabling the Government to live within the nation's means, we shall be able to take firm steps to get interest rates down and to take other advantageous measures in reducing tax rates.

Mr. Robert Atkins: Will my right hon. Friend find time during her busy day to cast her eye over the district auditor's report on the London borough of Lambeth and to consider the Socialist record of the London borough of Haringey, represented, so regrettably, by the hon. Member for Wood Green (Mr. Race)? Will she compare the records of those profligate Socialist authorities with the likes of the borough of Preston, Tory-controlled for three years, which has managed to reduce its rates from 32p to 8p in the pound? Will she draw any conclusions from that comparison?

The Prime Minister: If those figures are correct, I must, indeed, congratulate Tory-controlled Preston. I hope that all local authorities will follow its example and spend ratepayers' money very sparingly.

Mr. Wellbeloved: Will the Prime Minister take her courage in both hands and find time today to explain to the


TUC that, having allowed her Ministers to accept pay increases ranging up to £136 a week, neither she nor her colleagues in the Cabinet have the authority or moral credibility any longer to urge wage restraint on working men and women?

The Prime Minister: I rather thought that pay increases concerning this House were approved by this House as a whole.

Mr. Stokes: Before my right hon. Friend makes her statement on the Blunt affair tomorrow, will she realise that most of the furore over the case has been created by journalists? The public's only interest is to see that it never happens again and that any traitors who are discovered should be immediately punished.

The Prime Minister: May I make just one comment? My concern and duty are with the efficiency and morale of the security services. I put that first.

Q.4. Mr. Sever: asked the Prime Minister if she will list her official engagements for Tuesday 20 November.

The Prime Minister: I refer the hon. Member to the reply which I gave earlier.

Mr. Sever: In what is obviously a busy day, will the Prime Minister find time to look at the Order Paper and take note of early-day motion 207 and thereafter consult her right hon. Friend the Secretary of State for the Environment with a view to allowing Government time for the further progress of the Bill, which was not reached last Friday, presented by my hon. Friend the Member for St. Pancras, North (Mr. Stallard) in order to relieve what is a grave problem for many unfortunate citizens in cities throughout the country?

The Prime Minister: That question should be addressed, perhaps, to one or other of my right hon. Friends. As the hon. Member will know, it is most unusual for a Government to allow time for Private Members' Bills. My understanding is that the Government already have powers to deal with the mischief of which the hon. Gentleman complains.

Mr. Churchill: Does not my right hon. Friend find it strange that so many Opposition Members should be vindictive towards one who followed his Marxist conscience? Will she not yield to their

pressure to see the dismantling of our security services in the face of a rising Soviet threat?

The Prime Minister: I have in part, already made my position clear. I am very concerned to do my main duty to see that the security services operate efficiently and well. We must recognise that they can do that only if they have a con siderable element of secrecy.

Mr. Terry Davis: Will the Prime Minister find time today to reflect on the strange contrast between the treatment of a secret Communist, who has committed treason, and that of an openly Communist shop steward at British Leyland?

The Prime Minister: There is no parallel between the two cases.

Mr. Hal Miller: Will my right hon. Friend take time today to consider with her right hon. Friends amendments to industrial relations legislation with the object of affording some protection to ordinary shop floor workers who wish their company to be successful and who do not wish it to be penalised through being on strike for eight weeks or more, on union instructions? Will she afford them some protection against shop stewards who not only ignore their wishes, as expressed by ballot, but who seek to undermine their companies and their jobs?

The Prime Minister: We had hoped that the shop floor, by its decisive vote, had protected itself. But we shall consider any further matters that my hon. Friend wishes to put before us. We are anxious that the shop floor should be protected.

Mr. Heffer: Will the right hon. Lady give a categorical assurance that in no circumstances, despite what has happened in relation to Mr. Blunt, will there be a witch hunt against people for holding Marxist views which, so far as I understand, are not illegal in this country? If we did pursue such witch hunts, we should be pursuing the same policies of discrimination as the Soviet Union.

The Prime Minister: The hon. Gentleman knows that I am the staunchest defender of freedom of speech and of worship. The question in the Blunt case is not what views people hold but the action that they happen to take

Mr. Marlow: Will my right hon. Friend take time today to tell her colleagues in the Common Market that the present situation in Europe is intolerable for this country, and that we should in future concentrate on devising common policies that suit our common interests rather than trying to divert our interests to suit common policies that just happen to have existed for a period of years?

The Prime Minister: I saw some of our Common Market friends earlier today, and I have made two things very clear. The first was that half a loaf would not be enough and that we follow the traditional British literary example of asking for more. The second was that a treaty of the kind in question must be in tune with the needs of the times, and that a very good Conservative maxim is that change is the means of conservation.

ENERGY SOURCES

Mr. Gwilym Roberts: asked the Prime Minister if she will initiate discussions with Heads of Governments in other major countries with the aim of cooperating in developing alternative energy sources.

The Prime Minister: This issue was discussed at the Tokyo summit in June, on which I have already reported to the House. It was agreed there that an International

Energy Technology Group linked to the OECD and the IEA should be created. That group will review the action already being taken and the potential for commercial development of alternative energy sources.

Mr. Roberts: Will not the right hon. Lady accept that progress is still lamentably slow and that the main obstacles to the development of some alternative sources, particularly solar energy, are political? Will she use some of the courage to which she modestly referred earlier to tackle other Heads of Government on this matter?

The Prime Minister: I do not think that there is any political difficulty about the development of solar energy. One of the problems is that in this country we should not get much out of expenditure on solar energy. We shall need far more than that. The political difficulties—and they are not party political difficulties—arise on the further development of nuclear energy. As the hon. Gentleman knows, I have made my own views on that matter very clear.

STATUTORY INSTRUMENTS, &amp;c.

Ordered,
That the draft Building Societies (Special Advances) Order 1979 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. St. John-Stevas.]

JURY VETTING (ABOLITION)

Mr. Alfred Dubs: I beg to move,
That leave be given to bring in a Bill to prohibit the inspection by either party in a criminal case of the panel from which the jurors are drawn, and to make it illegal for either party to investigate or make enquiries of any jurors on the panel and to require the prosecution to prove in court their reasons for objecting to any juror.
The Bill has three main aims. The first is to abolish the practice that has come to be called "jury vetting"; the second is to make it illegal for either the prosecution or the defence to investigate or make inquiries about individuals an a jury panel; the third is to require the prosecution to prove its reasons for objecting to any particular juror when the matter comes before the court.
The practice of jury vetting has been going on, largely in secret, for a number of years. It is worth drawing the attention of the House to the fact that in Scotland there is no such practice. We possibly have a good deal to learn from what goes on north of the border.
The practice came more to light about a year ago, when the then Attorney-General published guidelines to cover the practice, although it appeared that the guidelines, in one form or another, had been in existence for about the previous four years.
Under jury vetting the prosecution is given access to the panel of names from which the jury will be selected. In certain cases, the prosecution can then check with the Criminal Records Office, Special Branch files and even local CID files, the background of those whose names are on the panel. It might work as follows. Let us suppose that a prominent militant trade unionist was on trial in connection with an industrial dispute. In such an instance it would be possible for the prosecution to check on the list, on the assumption that any trade unionist who was on the panel from which the jury would be selected could be alleged to hold "extreme" views. The prosecution could then ensure that every trade unionist was removed from the panel before that case came to trial.
I am not saying that there has been an instance of precisely that sort, but

the problem with the whole procedure is its secrecy; we simply do not know. But it does not take an example like that to indicate what a reprehensible practice jury vetting is. Whatever is said to the contrary, it is bound to assist the prosecution more than it assists the defence, because, even if—as has more recently been established—the defence can have some access to the names, it does not have the resources or the facilities to carry out the sort of vetting that the prosecution carries out.
Secondly, the practice detracts entirely from the principle that a jury should be randomly selected. Thirdly, it impinges significantly on the civil liberties of jurors, who are obliged to perform a public service and who, unknown to themselves, may be forced to have their private lives scrutinised.
There was an instance quoted in the newspapers not long ago when a professor discovered that he had been found unacceptable by the prosecution. As he said, he regarded himself as eminently respectable. He added
I am an old Etonian … I am not my idea of a long-haired anarchist
and so on. Whatever the merits of that individual gentleman, he had every right to feel aggrieved that in performing a public duty he had been exposed in public, for reasons of which he knew nothing, and made to appear in some way a suspect person.
Lastly, the practice is reprehensible because it is carried out in secrecy. Excessive secrecy in relation to our system of criminal justice is not desirable, because it increases suspicion that all is not well with our system of criminal justice.
People may say "But surely we need some safeguards. What happens if one member of the jury is idiosyncratic, or maliciously inclined?" The answer is that, of course, there are safeguards.
First, we have majority verdicts. Ten out of 12 members of the jury are required to agree in order to bring in a verdict of guilty. Therefore, we allow for the odd idiosyncratic individual who might be a member of a jury panel.
Secondly, I suggest that when we come to the eligibility of jurors—that is, whether they are not qualified because, for example, they may have served five


years in gaol or in the last 10 years may have served three months or more in gaol; those will be disqualifications. At present, the police, who are mainly the prosecutors, check on such disqualifications. It would surely be preferable if the court officials were given the responsibility to check on disqualification. They could have access to the Criminal Records Office and make sure that nobody on a jury panel should not be there because he was disqualified under the statutes.
In the United States the procedures are quite different. Some of the arguments in favour of jury vetting take us nearer to the American system, where there is a very open procedure—the fact that it is open has merit—of challenging many of the jurors. Indeed, it becomes part of the practice of defence and prosecution to have many challenges and to try to achieve a jury composition that will be favourable to the client of the defence, or against the accused, if it is a prosecution challenge.
The result of those procedures is to go even further away from the random jury selection that has been a feature of the British jury system, and I do not believe that it would be desirable to move in the American direction.
Turning again to the British system, I am clearly not suggesting that we should take away the right of challenge of jurors in open court by the prosecution or by the defence. That is a safeguard. But I am suggesting that the prosecution, which in practice has an unlimited right to challenge jurors, without showing the reason, should now have to show the reason. That would be an additional safeguard, in

case the lists of potential jurors have got into the prosecution's hands. It would be a worthy safeguard, and should be part of the Bill.
The practice of jury vetting that has grown up has never been sanctioned by Parliament. It has been conducted in secrecy, to the detriment of justice, and it has done quite a lot to damage faith in our system of justice.
Talking about juries, Blackstone's "Commentaries on the Laws of England" attacked "secret machinations" which might "sap and undermine" the jury system.
I seek to introduce the Bill in order to improve our jury system and help to improve faith in our system of justice.

Question put and agreed to.

Bill ordered to be brought in by Mr. Alfred Dubs, Mr. Alexander W. Lyon, Mr. Robert Kilroy Silk, Dr. Oonagh McDonald, Mr. Jack Straw, Mr. Clive Soley, Mr. Frank Dobson and Miss Jo Richardson.

JURY VETTING (ABOLITION)

Mr. Alfred Dubs accordingly presented a Bill to prohibit the inspection by either party in a criminal case of the panel from which the jurors are drawn, and to make it illegal for either party to investigate or make enquiries of any jurors on the panel and to require the prosecution to prove in court their reasons for objecting to any juror: And the same was read the First time; and ordered to be read a Second time upon Friday 7 December and to be printed. [Bill 81.]

Orders of the Day — BRITISH AEROSPACE BILL

Order for Second Reading read.

The Secretary of State for Industry (Sir Keith Joseph): I beg to move. That the Bill be now read a Second time.
We are dealing today with a very successful and important national asset—the British Aerospace organisation. The purpose of the Bill is to enable that organisation to be even more effective and successful. The British aerospace industry has to operate in an intensely fierce international world of competition. Its success and the success of its future activity will depend upon first-class teamwork in which marketing, design, research, development, production and all the supporting skills of brain, vision and hand are under the leadership of people with drive and imagination and management of high quality.
It is a team operation and I pay tribute to its present board, the chairman, management and staff of British Aerospace, and to the fine record that they inherited from private enterprise and have continued during the period since nationalisation. The change that we propose in the Bill is in no sense a judgment, let alone a criticism, of those I have mentioned, as individuals or as a team.
We do not believe that nationalisation is the right framework for so intensely competitive and sophisticated an industry. That is why we make proposals in the Bill for a change that we hope we can persuade all hon. Members to accept. Our proposals are in the interests of the industry, of all those who work in it and of the country as a whole.

Mr. Bob Cryer: The Secretary of State has emphasised repeatedly that the present organisation is beyond criticism and that the Bill offers no criticism. Why, therefore, is he bringing in the Bill if the organisation is beyond criticism? Does that not indicate that British Aerospace is doing a good job?

Sir K. Joseph: The hon. Member is absolutely right. The Bill makes no criticism and I shall make no criticism whatever.
There is a momentum flowing from the pressures on private enterprise firms that was inherited in the early years of nationalisation. I ask the House to consider the effects of nationalisation on a competitive industry. I hope that the hon. Member for Keighley (Mr. Cryer) will find that my lack of criticism of British Aerospace or anyone connected with it is perfectly compatible with the argument that nationalisation is not the right framework within which it can maintain, let alone improve, its present performance.
The reason for that is that there is not in nationalised industries—inherently there cannot be—the unremitting pressures to serve the customer well and profitably that flow from the need for private enterprise to depend upon its own resources. In the last resort a private enterprise company lives under the sanction of the fear of bankruptcy. On the other hand, a nationalised industry, however good the people in it, is immune from many of the pressures which stimulate efficiency. I make no criticism whatever of the quality of the individuals engaged in nationalised industries; it is the framework within which they work that I criticise. The pressures which stimulate efficiency are to identify correctly what the customer wants and to adapt ceaselessly in the service of the customer.
A private sector company, be it what we confusingly call a public or private company, has no such immunity. In the last resort it can go bankrupt. It cannot look to the taxpayer to bail it out. Upon its own performance will depend its profits, which are the source of its expansion, investment and, in the ultimate, survival. A private sector company will also depend on its credit rating and the ability to persuade savers and savings institutions to invest in it.

Mr. Eric S. Heffer: (Liverpool, Walton): Would the right hon. Gentleman argue that prior to public ownership the coal mines were more efficient than they are now? Would he argue that British Railways were more efficient in the past than now? Would he argue that British Gas was more efficient than it is now? Would he argue that Rolls-Royce, which practically collapsed, was more efficient in the past than it is now? What about all the other companies that have had to


be bolstered up and taken over? Of course there are problems with public ownership—no one would deny that—but the right hon. Gentleman's premise is totally wrong.

Sir K. Joseph: I am making an even more general point than that covered by the hon. Member for Liverpool, Walton (Mr. Heifer). Private enterprise companies are ceaselessly forced to adapt if they are to survive. I agree that some private enterprise companies do not adapt, but they do not survive. Some other organisation that is more efficient takes on part or all of that company's activities and adapts them or they vanish, and the human and financial resources engaged in those activities are deployed elsewhere.
In a nationalised industry the process of adaption is infinitely slower. One can see in the steel industry today the sad fact that delays in adaptation make that adaptation when ultimately it comes even more cruel than it would have been had that industry adapted more quickly. Therefore, I stand on the general principle that I have tried to articulate.
Immunity from pressures of the market—I am certainly not saying that this has happened in British Aerospace—can relax the dedication to customer service. We see, therefore, the movement of British Aerospace from nationalised to public company status as beneficial in every way to those who own it, those who work in it, those who supply it and those who are its customers.
The pressures of the market pervade a whole organisation, however big, provided that that organisation has not been given immunity by nationalisation. The pressure of the market and the pressure to satisfy the customer are the best ways of ensuring profitable competitiveness, which is the framework that will best ensure an expanding order book, an increasing number of well-paid jobs and satisfactory profits.

Mr. Arthur Palmer: Following the logic of the Secretary of State's argument, if British Aerospace is turned from a corporation into a company—which is the general intention—and that company gets into financial difficulties because of international competition, does the right hon. Gentleman seriously suggest that his Government, or

any British Government, would allow it to collapse?

Sir K. Joseph: The logic of the argument I am spelling out is that the pressure to survive by its own skill is the best guarantee that British Aerospace will succeed in the face of fierce international competition. It is the Government's confident view that that will happen. I do not accept the assumption of the hon. Member's question.

Mr. Douglas Jay: The Secretary of State says that the doctrine of the pressure of the market is a general principle. Will he apply that to agriculture?

Sir K. Joseph: In this country we have what is probably the most efficient system of agriculture in the world. I wish that all business activities were as efficient. It has its own framework, as has agriculture in most countries. I hope that Labour Members will accept that, although I have a doctrine and a thesis, the action proposed in this Bill is not doctrinaire. [Interruption.] I ask hon. Members to suspend their judgment for a moment. If we were taking a doctrinaire view, we would not be offering to the public roughly half the shares in British Aerospace we would be offering them all. We are not doing that. We propose only such a change as will suffice to remove the immunity from the market which we see as a danger to the continuation of the success of British Aerospace.
At the same time, we intend to retain a large Government stake in the industry. It is our hope that the framework proposed in the Bill will provide a stable position for this important and successful industry. We are offering a pattern of ownership which follows the successful precedent of British Petroleum. In that case there was, for many decades, a very large public ownership of shares, coupled with a large private enterprise share, all associated under independent and highly successful management in a competitive international field. It is that precedent that we seek to follow in this Bill.
We believe that management will function best when it knows that its business is utterly dependent on pleasing not Ministers and civil servants, however well intentioned they may be, but customers and investors. In the aerospace


industry the customers are intensely sophisticated. In this modern age, investors—individual and institutional—are also sophisticated. The biggest investors are the pension funds and the insurance companies, disposing of the savings of millions of our fellow countrymen for their retirement or against personal mishap. Satisfying these sophisticated investors is the surest guarantee that management will be of the highest quality and that the industry will be internationally competitive.
We wish to create a situation in which the spur to satisfy not only the customers but the investors as well will be a stimulus towards the success that we all want for this industry. That stimulus is the best way to ensure an expanding order book, an increasing number of jobs and good profits. Of course, British Aerospace in its new form will still have the Government as a substantial client. Perhaps the Government will be its most important client. However, the Government and Ministers will no longer be the masters.
The Bill will allow the Government on an appointed day to vest the existing business in a company, all the shares of which will be held by or on behalf of the Crown. The Government will have the power to sell those shares. British Aerospace Limited will be an ordinary company, subject to the Companies Act. Very soon after the transfer of business the Government intend to sell about half their shares. The Government will be a substantial shareholder and, as I have emphasised, a substantial buyer through the Ministry of Defence. The purpose of the Bill is to establish a stable partnership between public ownership and private ownership which we hope will endure over the decades ahead, whatever the Government of the day.

Mr. John Silkin: I thank the hon. Gentleman for giving way. It may cut five minutes off my speech. He has said consistently, both in his statement on 23 July and today, that the Government shareholding will be about half. He is not as ingenuous as he sometimes likes to give the impression of being, and he knows that there is some difference between the half being greater in the Government's holding or greater

in the private holding. Which side of that line will the Government's share be? Will the Government have a majority or a minority holding?

Sir K. Joseph: I emphasise that, whatever the precise share of Government ownership, we do not intend to exercise control. The Government have not decided precisely on the share ownership at this stage. There is a factor which we cannot judge in advance. We propose to encourage employees to own some shares and until it is known—and it cannot be known until the event—what proportion of the shares will be taken up by employees, we cannot tell whether we will have a numerical majority in the share ownership. I emphasise that, whatever the precise proportion of shares that finish up in the Government's hands after the floating of the company, that proportion will not in any way diminish our determination not to use our shareholding to exercise control. That is why I am not being evasive when I speak of the Government's intention to retain, at the first stage, about half the shares.

Mr. Barry Sheerman: The Secretary of State has just said that this company will be built on the basis of the parallel with British Petroleum. Even so, the Government will have back-door or surreptitious control over the industry because they are the major purchaser of the product that British Aerospace puts on the market. Therefore, in a way, this is a less healthy situation because by the back door, by negotiating and by pushing and nudging, the Government will have control. Will the Secretary of State assure us that every contract will be put out honestly so that the Japanese, the Americans and the French can compete for defence contracts on the same basis? Or will this be a back-door method of Government control?

Sir K. Joseph: I assert that this is an intensely important national asset and we must preserve it from foreign control. The degree to which there is genuine international competition in providing defence needs is, of course, a matter for the House to judge. However, we do not in any way see this Bill as becoming a framework by which the Government, as a buyer of defence equipment, will control the industry. We shall be an


important buyer, as Governments inevitably are. But there is no power to control simply because we are an important buyer. After all, the Government are an important buyer of avionics from many private enterprise companies. Is it suggested that as a buyer, the Government control the companies from which they buy? Certainly not.
The Government will be an important buyer, but we hope to establish a stable partnership between public and private ownership. There will be a substantial private sector equity capital, shared between individuals and institutions. We hope that a substantial number of individuals among those investors will come from the employees of British Aerospace Limited. British Aerospace Limited will raise its capital on the financial markets of the world, just as any other company does, with no privileges from the Government and no Treasury guarantees on loans. Any borrowing will not be counted in the public sector borrowing requirement and British Aerospace Limited will have to stand or fall according to its own efforts. The Government will be a shareholder like any other, except that they will be a large shareholder.

Mr. Jay: Will the right hon. Gentleman be more precise and answer the question that the Secretary of State for Trade could not answer yesterday? After the sale of shares, will the Government appoint some of the directors of the company?

Sir K. Joseph: The short answer is that the Government propose to have the power to appoint two part-time directors. I shall come to that matter shortly. The Government's general liability will be limited to that of any other shareholder and their liability will be limited to their equity investment. That truth must be recognised by all concerned—other shareholders, lenders, those who trade with the company and those who work for it.
In a wider sense, the company will fall outside the public sector. We do not intend to control the company and we shall have no powers to direct the company, nor do we intend to intervene in its commercial administration. The Bill will give the Government the power to sell shares in the new company to which the business of British Aerospace will be transferred. Very shortly after that transfer, the Government

intend to sell about half the shareholding. We have deliberately eschewed any solution that would have involved selling all the shares to the public. We hope that a stable framework has been created for partnership.
The Government have not approached the Bill by trying to sell the largest possible proportion of shares, but have chosen to establish a partnership, continuing substantial private and public ownership.

Dr. M. S. Miller: The right hon. Gentleman has made a point several times that interests me. He said that the Government will never attempt to exercise control. However, that is the very point that worries British Aerospace at the moment. British Aerospace fears that a majority or dominant private holding will change the nature and national identity of the company.

Sir K. Joseph: I shall turn to the importance of preserving the national identity of the company.

Mr. Cyril Smith: I seek an honest point of clarification. Will the Government be represented in some way at the annual meeting of shareholders? If they are represented, and if their shareholding amounts to more than 50 per cent., would they not control the appointment of directors?

Sir K. Joseph: I do not undertake that the Government will never vote its shareholding as regards the election of directors, but they will be a shareholder as any other shareholder. It is important to the future welfare of the industry and all who work in it that a stable framework is established.

Mr. Roger Stott: If the new company under the Companies Act will be independent of Government interference, and if the Government have no control of that company, what will happen to launching aid? Will the Government provide such aid?

Sir K. Joseph: The position of launching aid will be the same in future as it has been in the past and as for other high technology industries. There is a possibility that launching aid will be given—although with public spending in its present state, the prospects for launching aid or support for any new activities are


pretty slim. That will not come as a surprise to the hon. Gentleman. However, the possibility remains precisely the same in theory. The Government wish to demonstrate, by the retention of a very substantial shareholding—

Mr. Heffer: He has gone mad.

Sir K. Joseph: Would the hon. Gentleman like to ask something?
The Government wish to demonstrate, by retaining a substantial shareholding, that, although they propose to sell a share of the ownership, they none the less have complete confidence in the industry's future. The retention of approximately half of the shares is an earnest of our confidence. Special arrangements will be made in the offer of shares for employees of the company. We intend to promote a significant employee shareholding. The Government will advance their proposals nearer to the flotation rate for the best means of doing that, taking advantage of those arrangements by which income tax relief is available on shares to employees.
The timing of the sale will depend upon suitable market conditions, but it could occur at any time after Royal Assent has been received.
I have explained the general principles that will guide the Government's behaviour as a shareholder: the independence of the company from Government control and the company's necessary reliance on its own resources. In practice, it will be for the Government, as sole shareholders of the new company in the first instance, to appoint the first directors of British Aerospace Limited. As an inevitable result of the transition, our aim will be to appoint an experienced and independent board of directors who will determine the business policy of the new company and ensure continuity of management, board and lower levels. The directors will be drawn from the present board members of British Aerospace and from others with relevant commercial and financial expertise.
The Government will not intervene in the commercial decisions of the company. I do not foresee circumstances in which the Government would use their shareholding in opposition to a majority on the board of directors. I shall make provision for Government directors—

part-time directors—to serve on the board of the company.
The articles of association of British Aerospace Limited will give the Government the right to appoint two part-time non-executive directors to the board. Those appointments will serve at least two purposes. First, there is an increasing agreement among commentators on company affairs that a board is strengthened by external directors. Through their right to appoint those two directors, who will be chosen for their financial, commercial or industrial experience outside the aerospace industry, the Government will ensure that the board of British Aerospace Limited will have the benefit of two external directors.
The existence of two such men or women, well informed about the company's affairs but independent of its fulltime management, may provide a valuable addition to the Government's view of the company that would normally come from contact with the chairman. There is no question of those directors acting as the Government's agents, or conveying Minister's wishes and intentions. I have no doubt that the two directors appointed by the Government will discuss with the chairman any comments that they intend to make to the Government. I would expect and require those directors to inform the chairman before discussing the affairs of the company with the Government.

Mr. John Wilkinson: Would my right hon. Friend consider appointing non-executive directors from the field of aerospace—for example, from avionics or civil air transport? That kind of experience might be just as valuable as experience in commerce or in finance.

Sir K. Joseph: That is a valid point that can be discussed in Committee. Unlike the Government directors of British Petroleum, the Government directors of the company will have no power of veto, nor will they be able to issue directions to the company. In one important respect we propose that they should have fewer rights than other directors, since they will be precluded specifically from voting in board meetings on contracts between the Government and British Aerospace Limited. By that means we seek to avoid the danger to which reference was made


in an intervention—that of dominating the company through defence contracts. We propose to preclude the part-time Government directors with their votes from entering into arguments on particular proposals for contracts between the Government and British Aerospace Limited.
These two directors will be non-executive and they will be prevented by the articles of association from serving as chairman or deputy-chairman of the company, but in other respects they will act as any other director. In particular, their responsibility, like that of all company directors, will be to the company that they serve and not to the shareholders to whom their appointment is due.
I intend that the articles of association of British Aerospace should contain a further special provision. British Aerospace Limited, like the present statutory corporation, is an important national asset of prime importance to our defence. The Government believe that it would be wrong to allow the company to fall under foreign control or influence. The articles of association of the company will therefore contain a provision limiting foreign ownership. I have not yet decided the appropriate figure, but the maximum figure that I am considering is 15 per cent.
We shall be prepared to use our own voting rights to ensure that this restriction remains in the company's articles, and we shall also be prepared, if we judge it necessary, to use our own voting rights if a single substantial foreign shareholding were built up and that shareholder sought to use his position to secure the appointment of a director to reflect his interests. We are confident that we shall in this way be able to ensure that a company central to our defence interests remains in British control. The Government believe strongly that it would be against the company's own interests, as it would be contrary to our concern for the defence of the realm, for it to be subject to foreign influence.
The Government will have the power not only to subscribe for equity shares but also to acquire them by purchase in the market. They will also be empowered to take up convertible securities. These powers are necessary if we are to be able to ensure that the Government are able, if they wish, to preserve their proportionate shareholding. They are designed

to ensure that ii the Government wish to retain a particular percentage shareholding we shall be able so to do. Clauses 5 and 6 of the Bill give the Government this power. But, to prevent those powers being used in ways contrary to the Government's intention of separation from the company, clause 7 will limit the extent to which the Government, under this statute, can acquire shares in the company.
After the first sale of shares, the Secretary of State will be required to set a target investment limit for the Government, not higher than the proportion of the voting rights the Government then hold. Once set, such a target investment limit can be reduced, but it cannot, under the Bill, be increased. Thus, if after the initial sale of shares the Government held 50 per cent. of voting rights in the new company—I quote the figure only by way of example—the Government would thereafter be required to avoid owning a greater proportion than that. They will not be required to keep it up to that level and will be able, if they so decide, to reduce their proportionate shareholding and to set a new target investment limit at this lower level.
Whatever the value of the target investment level set at any time, it cannot, under the Bill, be increased. It is a downward ratchet, ensuring that the powers in the Bill are not used to increase the Government's shareholding.
I have described the change that the Bill will bring about in the status of British Aerospace. It is important to set out the full significance of the metamorphosis that is to occur. But it is equally important to recognise that change in status will go hand in hand with complete identity between the business of the corporation as it now exists and the business of the company. The existing liabilities and obligations, as well as the rights and property, of British Aerospace will all pass to the new company on the appointed day. In this, the most important of senses, British Aerospace Limited will be the true and complete successor to British Aerospace.
As the House knows, the Government have always favoured maintaining the present business of the statutory corporation intact. In my statement to the House on 23 July I indicated that that was the course we strongly preferred. I then said


that we should reserve the option of selling just the dynamics business, and that the legislation would provide for a split between these two parts of the business. On further examination, we have decided to confine the legislation to that required to transfer the business to one company wholly owned by Government.
We have done so because the arguments which led us in July to prefer maintaining British Aerospace intact have been tested and found firm. I have been much impressed by the strength of feeling throughout British Aerospace for keeping together the present business. I have listened to a wide range of advice from those concerned with the industry and also from financial advisers. My colleague the Minister of State, who is in Brussels today, and my colleague the Under-Secretary—the hon. Member for Arundel (Mr. Marshall)—have consulted a number of people on this subject. We have studied further the advantages of complementary and mutually reinforcing aircraft and dynamics businesses. Our decision to maintain the present business intact ensures that the new company will provide complete continuity with the nationalised industry which it succeeds.
I stress, too, that vesting of British Aerospace's business in the successor company will have no effect on the position of employees in the organisation. Their contracts of service will continue. Time served which counts with British Aerospace will equally count with British Aerospace Limited. The emoluments, conditions of service and rights of employees will be unaffected by the vesting. There will be no termination of employment on vesting, since the contracts of employment will simply pass by law from the statutory corporation to the successor company. On the appointed day employees of British Aerospace will become employees of the successor company, to all intents and purposes as if they had always been employees of that company.
The prospects of employees in the new company, like those in the existing corporation, will depend on their ability to increase efficiency and compete successfully. Similarly, for pension purposes, any period of service which counts for the British Aerospace pension schemes will count with the new company. Any

period of service with a wholly owned subsidiary of British Aerospace will be unaffected, since it is only the ownership of that subsidiary which changes to the successor company. British Aerospace's pension schemes, made under section 49 of the Aircraft and Shipbuilding Industries Act 1977, will continue.
There will be other essential elements of continuity. Where the Government have entered into specific agreements relating to contracts entered into by British Aerospace, they will, of course, maintain the agreements and honour their obligations in respect of contracts to be carried out by British Aerospace Limited.
In this context, I should single out the agreement entered into by the Government in respect of British Aerospace's obligations as a member of Airbus Industrie. The Government are committed, under the principles of co-operation agreed in 1978 with the other major partners in the airbus project, to support British Aerospace's participation in Airbus Industrie from 1 January 1979, and to stand behind the discharge by British Aerospace of its financial obligations to Airbus Industrie. I hereby reaffirm our commitment. The change in legal constitution and ownership of British Aerospace in no way weakens or alters the support of the Government for participation by the United Kingdom airframe industry in the airbus programme. Airbus is the most important civil aircraft undertaking which benefits from a specific Government commitment of support.

Mr. Barry Jones: Does what the right hon. Gentleman has just said with regard to Airbus Industrie mean that he is guaranteeing, as the previous Government did, that there will be nearly 1,000 new jobs in the making of the wing of the airbus by British Aerospace, Chester, in my constituency of Flint, East?

Sir K. Joseph: I need notice of such a question, but I am sure that if I am given notice I shall say that Governments are not in the business of guaranteeing such things. It is entirely for the management of British Aerospace. In fact, a moment's reflection leads me to give that answer now—that it must be for the management to answer a question such as that.
There are also military projects, where the Government have given specific undertakings through memoranda of understanding. These undertakings will be maintained. The Bill specifically so provides. All agreements which refer to British Aerospace will, after the Bill has been passed, be taken as references to the successor company.
The Government also recognise that those who have traded with British Aerospace as a statutory corporation in the past have relied on the Government's assurance that British Aerospace, as a major nationalised industry, would not be allowed to default on its debts. British Aerospace, in whose finances customer advances figure prominently, has relied on this assurance in a way that distinguishes it from almost all other nationalised industries.
For the new company, no such undertaking can be given. It is a feature of any limited company that its liability is limited. In the ultimate it may default. In this unlikely event, however, the Government will stand behind any obligations which it or any of its wholly owned subsidiaries had inherited from British Aerospace or its wholly owned subsidiaries.
That is the effect of clauses 8 and 9 of the Bill. Through their provisions, those who entered into business with the statutory corporation have their position maintained in so far as is possible. This is, of course, quite without prejudice to new creditors of the company who will have to judge for themselves what security or guarantee to seek from the company. The fact that the Government will continue to honour these past commitments in no way implies that the Government will accept comparable commitments in the future.
It is clear from what I have said that the Government will continue to have many dealings with the new company. It is inevitable, in dealing with such a complex technology, and when defence interests feature so much, that this should be so. In addition, there are past commitments to the statutory corporation to be honoured, and agreements in respect of business transferred from statutory corporation to successor company to be maintained. The Government will be the company's main customer. The Government will continue to support, where

appropriate, the company's overseas marketing efforts in exactly the same way as they support other private sector companies, and as they already support British Aerospace; and, as I have explained, the Government will be the largest single shareholder in the successor company.
We believe it important to separate the various ties between Government and British Aerospace. The specific relations will continue to be administered as before—the customer relationship through the Ministry of Defence; support for overseas marketing through the Export Credits Guarantee Department and the Ministry of Defence sales support activity; the normal relationship between industry and Government through my own Department. We intend to maintain these quite separate from the Government's relation with the company as shareholders. In particular, we intend that the Government shares be held by the Treasury Solicitor, thus signalling the separation of the Government's role as shareholder from that of, for example, customer.
I come to the end of what I tear has been rather a long speech on an important Bill. I have described the general policy we intend to adopt towards the new company. In so doing, I have explained the background to the Bill as well as many of its specific provisions.
It may assist the House if I now rapidly summarise the Bill's powers. Clause 1 is the fundamental clause of the Bill. It provides for the vesting of the whole of British Aerospace's undertaking in a successor company, on a day to be appointed after consultation with British Aerospace. The company is to be the universal successor of British Aerospace. Clause 2 provides for British Aerospace's liability to the Government in respect of commencing capital and public dividend capital to be extinguished. Clause 3 provides for shares in the successor company to be issued to the Secretary of State. In effect, therefore, the Government's investment in British Aerospace will be excanged for shares in the successor company.
Clause 4 is a technical provision, which provides that if the company's capital is smaller than the former Government investment in the corporation the balance is to be carried to a special reserve, with


limited use only. Clause 5 empowers the Secretary of State to subscribe for or to acquire ordinary voting shares in the successor company and to take up or acquire securities which carry rights of conversion to ordinary voting shares. The shares may be held by nominees, by virtue of clause 6. These powers are subject to the target investment limit under clause 7. This will be set initially at the proportion of shares retained by the Government after the offer for sales of shares. The limit may subsequently be reduced but not increased. The Government's shareholding must not exceed the limit in force at any time.
Clauses 8 and 9 give effect to the principle I have explained—that the Government will stand behind the obligations of British Aerospace and its wholly owned subsidiaries which vest in the successor company. Clause 10 provides for certain provisions of the Aircraft and Shipbuilding Industries Act 1977 to cease to apply to British Aerospace on the appointed day. It provides for the eventual dissolution of British Aerospace by order, and makes provision for the transitional period until then. Clauses 11 to 14 contain supplementary provisions.
I have described the Bill as a simple Bill but also as one bringing about a fundamental change. It will allow the British industry to thrive subject to the stimulus of competition and the discipline of the market. It will allow men and women in this country to invest, directly and indirectly, in the industry. It will free Government and taxpayers from a significant contribution to the public sector borrowing requirement. It provides an opportunity for a new partnership between private and public sector.
I commend the Bill to the House.

Mr. John Silkin: On 8 November, speaking to a press conference in 123 Victoria Street, the Minister of State said:
I am proud to introduce this Bill, which will lead to the setting up of British Aerospace Limited
The Secretary of State did not go quite as far as that today, and I fully understand his dilemma. It was a dilemma and a rather difficult one for him, because he had to start from the basis of the

words of the Secretary of State for the Environment. On the Third Reading of the Aircraft and Shipbuilding Industries Bill, the Secretary of State for the Environment said:
If the Bill reaches the statute book, hon. Members should have no doubt that when we come to power we shall return these industries to the private sector as fast as possible".—[Official Report, 29 July 1976; Vol. 916–1, c. 995.]
The right hon. Gentleman, having preached havoc in Victoria Street, then went off to create mayhem in Marsham Street, but the promise was still there and, while one can say that a promise made by the Opposition three and a half years ago is liable by effluxion of time, when they reach a position of less freedom and greater responsibility, to be eroded, the Conservative manifesto in the last election, which after all is only seven months ago, stated:
We will offer to sell back to private ownership the recently nationalised aerospace and shipbuilding concerns.
So that was Conservative policy as recently as May of this year, and it was a Conservative policy that had, for various reasons, to be reversed by the present Government in some way as soon after the election as 23 July.
So there was the right hon. Gentleman's dilemma. How was he to reverse it and, at the same time, satisfy the impatience of his hon. Friends? What he decided to do, first—and he did it, and I congratulate him on doing it—very astutely was to raise in his statement of 23 July the possibility of hiving off the dynamic sector and then let that, as events unfolded, die its normal death, for it always was nonsense, and the right hon. Gentleman knew it was right from the start. Therefore, when he rejected it today, it all seemed to fit into a pattern of close examination and detailed study.

Mr. Michael Colvin: Does not the right hon. Gentleman feel that this somewhat pragmatic approach to British Aerospace is a good deal better than the approach of right hon. and hon. Gentlemen opposite which seems to be based entirely on clause four of the Labour Party manifesto?

Mr. Silkin: No. I may be dealing with that in rather greater detail later, and if the hon. Gentleman cares to interrupt again after that perhaps I will give way to him.
This was the position of the Secretary of State. He had got rid of the difficulty of hiving off, and I congratulate him on that. But how was he to get round the undertaking—since that was what it was—of his fiery friend the Secretary of State for the Environment? How was he to ditch the Conservative manifesto? It was suggested to him, I assume, that the correct method of doing that was to alter the framework of the ownership of the industry, so he moved from the idea of a State corporation to that of a public company. This is only a framework. There are 100 per cent. nationalised concerns already in existence which are already in the form of public companies. But the point about this one was that it was difficult to deal with if one was to maintain the basis of a denationalised concern. That is why the right hon. Gentleman brings forward today a Bill which provides for, roughly speaking, 50 per cent. Government-held shares and 50 per cent. privately-held shares.
The right hon. Gentleman says that the Government will not interfere in the effective control, and of course they will not interfere in management although they may have a couple of external directors. However, that is merely window dressing. It is not possible to do it that way.
As the right hon. Gentleman showed us, the Government are guaranteeing the completion of the contract on the Airbus. Will we make the wings? They are guaranteeing the military undertakings and all the surviving obligations. Is that an example of an arm's length transaction between the Government and one private or public company just like another? Of course it is not. It is a special relationships, and it has to be.
The right hon. Gentleman finds himself in this difficulty. He hopes to show that there cannot be any foreign influence in this company. We all know that there are strong and important national considerations involved. I am a little surprised that he has even allowed the limit of 15 per cent. to creep in. It seems a bit extraordinary. On that basis there could perfectly legitimately be a Soviet, Chinese or United States governmental holding inside the company. If he is right in saying that the Government will not exercise any control, what would they do about that?
What the right hon. Gentleman ignores is that, if there is a private shareholding and Government control and management is not exercised, the Government will not be able to stop the articles of association being changed. They will not have the majority to do that. Furthermore, the Government will not be able to exclude foreign influence and even foreign control. There will be nothing to stop any foreign company—indeed any foreign country—starting its own private company in the United Kingdom, having it as a domiciled United Kingdom company and letting that company take up the shares.

Dr. M. S. Miller: Will my right hon. Friend also postulate the possibility that directors of the company could have international connections with multinational firms or British international firms? By joining with other minority groups that have the same interests, it is possible that the minority interests could swing the direction in which the company goes.

Mr. Silkin: My hon. Friend is quite right, and that is what I was assuming. Clearly the control of the company will come via the board. My hon. Friend talked of a minority shareholding, but we have not been told whether it will be a minority or a majority shareholding. We have been told only that it will be about fifty-fifty. The right hon. Gentleman said only that the Government would have the largest shareholding. The directors will clearly have the effective control of the board and its appointments would be in the hands of the shareholders, which might be disastrous from a British national point of view.

Mr. Jay: I apologise for delaying my right hon. Friend, but is there not also this possibility? As I understand it, the Minister told us that it would not be possible under the Bill for the shares, beyond a certain point, to be sold to foreign interests. Is there anything in the Bill to prevent the assets of the company being sold by the board, which is no longer under Government control, to overseas interests? For instance, legally could the Government prevent the directors from deciding to sell the aircraft production business to a Japanese or other overseas company?

Mr. Silkin: My right hon. Friend's point is valid, but, as I tried to explain, even that is not necessary. After all, there is no reason why there should not be companies registered in the United Kingdom, such as KGB Limited or CIA Limited. The initials of course are purely coincidental.

Mr. Robert Atkins: What is the difference between the convoluted logic argued by Opposition spokesmen, namely, the control that shareholders exercise over a company, as opposed to the control that the Government, by owning it through nationalisation, exercise through their directors?

Mr. Silkin: There is all the difference in the world. The Government are there to protect the national interest. The Secretary of State and I have had our differences and arguments over the years in various spheres, but we both know that when a Minister does something in connection with his Department he is accountable to this House. A private or public company may be accountable to Private Eye but not to this House.
I sympathise with the right hon. Gentleman in his dilemma—and it is a tremendous dilemma—but I am bound to say that he has not solved it very well. The truth is that he understands that governmental control is necessary, but at the same time he has to please his hon. Friends, and he has therefore chosen this method.
As I have said, the right hon. Gentleman is a shining example to us all of integrity and of a refusal to budge from unpleasant truths. When he realises that the truth counts, he usually gets there in the end, although it may sometimes take him longer than others. In a recent television interview he was asked whether the realities of office had changed his views, and he almost gloried in the acceptance of the fact that he had altered his mind because of the realities of office. This is a good example of that.
In a way the proposals are certainly pragmatic, and there is no question about that. It is not quite such an ingenious solution as the right hon. Gentleman thinks, but he has to get away from the pressing reasons why the industry was nationalised in the first place—and here

I come to the question of the hon. Member for Bristol, North-West (Mr. Colvin), which I am afraid I answered rather monosyllabically.
The fact is that there are four good reasons why the industry should have been nationalised and should remain so. First, it was essential for there to be a merger of the competing enterprises. Private enterprise tried desperately hard to bring that about for a decade, and it failed completely. Incidentally, if the public company that the right hon. Gentleman postulates were as free as all that, there would be nothing to stop it, as my right hon. Friend the Member for Battersea, North (Mr. Jay) said, selling half of it off and we might again end up with two competing interests. That is something which nationalisation attempted to cure and something which even a Tory Government would wish to see preserved.
Secondly, private sector firms are simply not able to finance modern projects in the aircraft industry. They cannot finance the projects or the research and, as high technology plays a greater part, they will become increasingly less able to do so.

Mr. Colvin: That is not an argument. Throughout the world aerospace industries are dependent on Government funds for finance for research and development. The aerospace industry in the United States is no exception, but that is not a case for the United. States Government stepping in and nationalising that industry.

Mr. Silkin: If the Government are advancing the sort of sums that I think the hon. Member for Bristol, North-West and I might agree are necessary, there should be some measure of accountability to the person or Government producing those sums.
Thirdly, defence is the mainspring of our aerospace industry. It is an industry in which the Government are the main clients. Because defence plays such a large part, there is a spin-off for civil aircraft. A large proportion of the research and development in the industry is paid for by defence. Therefore, it is clearly right that research and development should come back into the general picture and back to the taxpayer, who pays for defence.

Mr. Cranley Onslow: Is the right hon. Gentleman's argument that any industry which is significantly dependent on Government defence contracts for its business should be in public ownership?

Mr. Silkin: I was not saying that. I should be prepared to argue the case with the hon. Gentleman at any time he likes. I was devoting myself to this Bill and this method. We are dealing with something that is overwhelmingly a question of defence—my hon. Friend the Member for Whitehaven (Dr. Cunningham) says 70 per cent. We are dealing with something that is rather different from the examples which the hon. Gentleman might give.
The fourth reason, curiously enough, is that nationalisation on the basis on which I put it gives a much more flexible arrangement. It is not inflexible. The inflexibility comes in a private company—if that was the real basis of things but I do not believe that it is—which is short of money and does not know what to do about it. That flexibility enabled the Labour Government to give the go-ahead to the HS146. The hon. Member for Woking (Mr. Onslow) laughs. However, 7,000 people in Hatfield—who, I regret to say, later returned a Conservative Member, though I doubt whether they will at the next election if they lose their jobs, which they might well do—

Mr. Wilkinson: Will the right hon. Gentleman tell the House how many airlines have signed a letter of intent to buy the HS146?

Mr. Silkin: I shall not go into that point. The hon. Gentleman knows well that management has discussed the matter with many people. It is very much on the cards at the moment. It protected 7,000 jobs and it has a future. After all, it is a partnership. If the hon. Member for Ruislip—Northwood (Mr. Wilkinson) is advocating to his hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) that those 7,000 jobs should be lost, perhaps he would do better to address his remarks to that constituency rather than here.
The Government seek to do something totally different. The right hon. Gentleman said that it was a pragmatic solution. Therefore, he accepts that total denationalisation would be the wrong

way to deal with the matter for some of the reasons—though not perhaps all—that I have given. The Government intend to save taxpayers' money. The way to do that is by cutting Government borrowing. The Secretary of State reiterated that today. However, I am confused about the matter. If it were true, it could only be on a one-off basis.
If the right hon. Gentleman believes that he will get rid of all the shares to private enterprise, he would have done so already. Is it such a saving to the taxpayer? Is it not much more of a tribute to the ingenuity of accountants? The right hon. Gentleman is coming face to fact with an ideology—a doctrine, he says—and meeting it by redefinition.

Mr. Onslow: The right hon. Gentleman said a moment ago that the Secretary of State was pragmatic.

Mr. Silkin: I was saying that instead of meeting the problem he redefines it. That is a different matter.

Mr. Onslow: It is often a good way to solve a problem.

Mr. Silkin: It may be a good way to solve problems within the hon. Gentleman's party. Perhaps the hon. Member for Woking is an expert on that. However, it is not the way to solve the problem itself.

Mr. Tristan Garel-Jones: The right hon. Gentleman is making great play of what he regards as pragmatic decisions or convoluted decisions from this side of the House. How does he propose to resolve the apparent commitment that has been given by the Opposition to confiscate private shareholding taken up by members of the public? I am sure that many of his hon. Friends regard it as an acid test of a democratic party whether or not it is prepared financially to compensate for private property that is confiscated in this way.

Mr. Silkin: The hon. Gentleman takes me away from the drift of my speech. Nevertheless, if the House is interested in what I have to say, I should be willing to take up that point. The only occasion that I know of the House confiscating shares was when the Conservative Government confiscated the shares in Rolls-Royce. I was in the House at the time.

Mr. Garel-Jones: But they were paid. will the right hon Gentleman's party pay?

Mr. Silkin: That came much later and it was not true at the time. The hon. Gentleman does not appear to know how it was done. It was done by bankrupting the concern. I promise him that my right hon. and hon. Friends have no intention of bankrupting this concern. We will rationalise it—that includes all the shares. As for the terms on which the shares will be taken back, my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) made a full and clear statement yesterday in the debate on the Civil Aviation Bill. If the hon. Member for Watford (Mr. Garel-Jones) cares to look it up, it is at col. 60 of yesterday's Hansard.
The Bill meets an ideology by redefinition. Is it not true that all Government borrowing counts against the PSBR—against the taxpayer? Up until now, private borrowings by British Aerospace, until the Royal Assent was given, would also count. However, the moment the corporation becomes a limited liability company the same borrowings from the same source cease to count against the PSBR. I hope that the Secretary of State agrees with me on that point. I notice that he is nodding his head.
What we are seeing is not a vast saving for the taxpayer but an accountant's sleight of hand. If the name is changed from a corporation to a public company, all the borrowings from the PSBR will be wiped off. If that could be done more often we would not owe anybody anything. No doubt the Secretary of State and his colleagues are busy doing more magic along those lines. As I say, it does not alter the source, only the classification.
Is the new method—pragmatic, as the right hon. Gentleman says—to be successful from the point of view of the future of the industry? In his press conference, the Minister of State said that the Bill would ensure a healthy future for the business. On another occasion I pointed out how extraordinary it was that the Secretary of State, the Minister of State and even the Under-Secretary of State—not the hon. Member for Arundel (Mr. Marshali)—used the word "business" when they meant "industry".
Business is totally different. It is a trade, a profession and a commercial undertaking. Industry is an organisation that produces manufactured goods. There is all the difference in the world between the two. If we look upon it as a business and in balance-sheet terms, we look not at the end product but only at what the balance sheet tells us. That is how the business man works. It is irrelevant to him whether he is dealing in aircraft or cups of tea. It is the same thing to a manufacturer who is dealing in something of national concern and interest. There is a vital difference in outlook between the two.
The Secretary of State says he hopes that the business will continue healthily. On 23 July he said:
I would also hope to secure continuity in management at board level."—[Official Report. 23 July 1979; Vol. 971, c. 29.]
He reaffirmed that aim today. Today he said that he had every confidence in the board.
Let us be quite frank. The right hon. Gentleman, or whoever is in charge, will use his votes to see that the board continues. That is what he has told us. In that case, he must take some note of what the board has to say about his present antics. It said in the British Aerospace News in September—and this is worth listening to:
Continuity of operation and concentration on the improvement of organisational efficiency would have been preferable without the uncertainty and distraction of changes effected by Parliament.
That is a very good reply from a board in which the Secretary of State—[HON. MEMBERS: "Was it a chairman's statement?"] It was a board statement. One cannot have a statement from the board in which only the chairman states his point of view. The matter has to be resolved by the board. This was a board telling a Secretary of State, who had every confidence in it and wanted its management to continue, that he was doing the wrong thing. Perhaps the Government do not understand that they are dealing with a business rather than an industry. Perhaps they think that their job is to sell aircraft, not shares.
I turn to the question of effective control. I have dealt with the inability to prevent foreign interests from taking over unless the Government are prepared to


have a majority shareholding and to use it quite ruthlessly. I believe that that is what they will be forced to do. The real attitude of the Government towards small shareholders was given this morning by the Under-Secretary of State in Standing Committee E. When I referred to small shareholdings in private concerns, I was told that I could not ignore "the almost non-existent rights of small shareholders". The shares will be offered to a group of small shareholders—to employees—who will hope to make a profit. After all, they are working in the industry and that attitude is perfectly understandable. Of course, they will not get a profit and they will have no rights. The pension funds will take over, not 50 per cent., but a large minority, and the Government will retain the existing controls as much as they can.
There is no finance available from private sectors that can possibly keep up with the enormous demands of this industry. That is why the question of launching aid is so important. Existing Government projects are likely to cost about £500 million. That is a great deal of money. We are talking about new aircraft on a large scale throughout the world. I notice that the Secretary of State said:
The Government look to the company to obtain the external funds it needs from commercial sources"—
and he went on to say, significantly:
although it will retain the power to provide funds on commercial terms, if this proves necessary".—[Official Report, 23 July 1979; Vol. 971, c. 29–30.]
If it proves necessary, does the right hon. Gentleman envisage that the money will be lent by the Government, or does it mean that it will come only in the form of equity funding?
The note to editors that accompanied the press notice of 8 November stated:
A lasting saving in public funds will be achieved because the company will not borrow from the Government.
That rather conflicts with what the right hon. Gentleman said on 23 July. Has there been a change of mind, or has it been put rather clumsily? If there has been a change of mind, and in no circumstances will money be lent by the Government to the company, does section 7 apply? I understand that section 7 states that any increase in funds coming from

Government must come in equity form and that it must be matched by a proportionate increase in private funds.
Let us suppose that the £500 million is needed and that the Government have a 50 per cent. interest. Does that mean that they can put in only £250 million? What happens if the other shareholders are not willing to put in £250 million? Will that be the end of all new projects? I am not alone in worrying about the financial side of this matter. When dealing with the more favourable statement of the right hon. Gentleman, the Financial Times on 24 July—I do not agree with its conclusions, but that is not unusual; I agree with its analysis—said:
Virtually all the United Kingdom's civil aircraft projects since the war have been un-commercial in the sense that the investment made by the Government, through launching aid and other support, has not earned a commercial return.
It went on to state:
If the Government follows a totally commercial policy in its attitude towards British Aerospace, then the British aircraft industry will almost certainly contract in size".
It adds:
This may or may not be a good thing"—
I happen to think that it is a bad thing—
but it is a strategic issue which cannot be ignored.
These are rather important considerations.
All over the world airlines are about to undergo a major re-equipment programme. There is no question about that. I believe that in the early 1980s we shall be talking of about 3,500, perhaps more, new aircraft being used by the world's commercial air fleets. Are we opting out? Is that what the right hon. Gentleman is telling us?

Mr. Onslow: I am interested in what the right hon. Gentleman is saying. Is he suggesting that there are some aircraft, as yet unfunded, to which presumably the British taxpayer should be making a contribution and which world airlines will be buying in the quantity that the right hon. Gentleman mentioned in three or four years' time?

Mr. Silkin: Unlike the hon. Gentleman, I do not look at what may be on the drawing board in two or three years' time, or in three or four years' time. I should like to know whether we are deliberately preventing ourselves from


engaging in that way, because we should not. We should not opt out.

Mr. Wilkinson: Is not the right hon. Gentleman aware that Airbus Industrie has a current order book for more than 300 aeroplanes, and that this is the biggest incursion into the world market that any European manufacturer has ever made?

Mr. Silkin: I understand that Airbus Industrie is not profitable and is not making any money at the moment. However, that does not alter my point. I asked whether we were opting out. If British Aerospace is to opt out of new models at a time when the rest of the world is re-equipping, we have a right to know. I hope that I shall receive an answer when the Minister replies. Either British Aerospace is opting out or it is not. If it is not, where will the money come from? That is the vital question.
I believe that Government funds will be needed to preserve a viable aircraft industry. I believe that the right hon. Gentleman well knows that that is so. I believe that a viable industry is also needed to protect our defence commitments. I believe that the right hon. Gentleman knows that also. The right hon. Gentleman has been fairly astute, although not as astute as he sometimes is, in devising something that looks to his hon. Friends as though it is total denationalisation. It is not. The Government will still have a good deal of control, and I believe that they will use that control as the years go by. In proceeding in this fashion, to get away from the commitment to his right hon. Friends and from the commitment in the Conservative manifesto, but at the same time to satisfy his party, he is obtaining for the British aircraft industry the worst of all possible worlds. He will achieve confusion, uncertainty and a good deal of anxiety among those who work in the industry. That cannot be good for morale or for the British aircraft industry. Therefore, let there be certainty.
We oppose the Bill and will oppose it violently—no, not violently but with our usual courtesy and efficiency—in Committee. When the time comes, we shall repeal the Bill and renationalise the industry.

Mr. Christopher Murphy: The right hon. Member for Deptford (Mr. Silkin) was kind enough to make reference to my general election victory. It was a victory that had much to do with the support that I received from the employees of British Aerospace. By their fulfilment of another election pledge here today, the Government will continue to enjoy that support.
I find it of great concern that Opposition Members may be unable to unlock themselves from their ball and chain of Socialist dogma and support this extension of public ownership. Public ownership is exactly what the Government are endeavouring to foster with the Bill—not the pseudo public ownership of the late unlamented Labour Government which nationalisation is falsely advocated as achieving, but genuine public ownership in which many individuals, especially employees of British Aerospace, will have the opportunity to participate
I find it of equally great concern that Opposition Members may be unable to escape from their self-imposed straitjacket of anti-Government thinking and support the Government's determination to provide this important industry with stability for the future. The BP type of partnership means that British Aerospace will not have to undergo a further period of uncertainty and upheaval such as resulted from the ill-starred attention paid to airframe and dynamics production by the previous Administration. Stability for British Aerospace will enable the management to get on with the running of the company without the political interference that has so often proved highly damaging when commercial decisions are needed.
The main objective of the Bill is clearly one of providing the industry with the best possible opportunities in the corning years. It means that British Aerospace will have made available to it all the financial resources of the capital market so that the company can protect existing jobs and create new ones. It means that British Aerospace will be secure in the knowledge that the present structure will be kept intact so that the company has a firm base on which it can develop its projects and maintain its production.
The consequence of the Government's action is to provide many sizeable benefits. The economy of our country will gain from a more efficient and viable aerospace industry in terms of the finance that is earned plus the military and civil equipment and aircraft which are created. Those involved in the industry—as in my constituency of Hatfield, where there is both the British Aerospace aircraft group and the British Aerospace dynamics group—will gain from the opportunities brought about by current successes and those which can be planned and brought to fruition in the future.
Private enterprise has proved to be highly successful in the aerospace industry, and how right it is to enable its advantages to be enjoyed once again. The partnership of British Aerospace and the A300 Airbus consortium, in which we secured the contract to build the wings, resulted from the commercial judgment of Hawker Siddeley Aviation. The development of the HS146 project, which has great potential for British Aerospace, also resulted from the initial confidence of that company.
A similar position exists in terms of the dynamics group, where collaboration between Hawker Siddeley Dynamics and previous Governments has produced new missiles and new systems vital to the defence of the United Kingdom and of crucial importance to our exports.
The Minister of State, Department of Industry said recently that he was proud to introduce the Bill. May I, in turn, say that I am proud to be in a position to support wholeheartedly this measure, Perhaps it is not too much to hope that Opposition hon. Members will realise that, when the British Aerospace Bill becomes law, it will be in the best interests of both the industry and those whose livelihoods are so closely linked with aerospace. If Labour Members oppose it tonight, it will be as a result of a purely partisan response from which they should have broken free.

Dr. M. S. Miller: My younger son drew my attention to an article in The Observer last Sunday. I cut out that article although I did not expect to refer to it in the debate. However, as a result of the speech of my right hon. Friend the Member for Deptford (Mr.

Silkin) in answer to that of the Secretary of State it has become clear that we are speaking today not about industry but about business.
The article in The Observer questions who is running the country. It reads:
For it raises an interesting question: who has been running the country all this time: the Government, Beecham's Pills or Hill Samuel's bank?
The article refers to situations which develop in industry and about the great tycoons who are, no doubt, the sort of people that the Secretary of State will be appointing, or will make sure are on the board of the new company. The article states:
Watching the gyrations of those tycoons, one can only marvel at the ease with which they move in and out of nationalised industries, as brief sitting-places in the perpetual game of musical chairs, while Hill Samuel or Beechams plays the piano. As they move briskly from chair to chair, or to several chairs at once, how much of their success depends on their own toughness, how much on other people's feebleness?
The article concludes by asking:
are the problems of the airlines"—
and here I shall incorporate the aerospace industry—
really the same as the problems of the banks or Lucozade?
Bills should be introduced for a useful purpose. I cannot see what use the Bill will be if and when it is enacted. It is interesting that the hon. Member for Welwyn and Hatfield (Mr. Murphy) is supporting a Bill which is at total variance with the manifesto on which he was elected. I hope that the hon. Gentleman understands that. Does the Bill meet the tests which should be applied when Bills are introduced? Will it increase the efficiency of the industry?

Mr. Onslow: Yes.

Dr. Miller: That is not in keeping with the remarks of the Secretary of State. He paid tribute to the industry. Will it make the company more able to withstand the very considerable pressure which comes from competitors and which will increase?

Mr. Onslow: rose—

Dr. Miller: I must carry on as I have only started my speech. Will the Bill make research and development in the industry easier?

Mr. Onslow: Yes.

Dr. Miller: Obviously Conservative Members would not be voting for the Bill if they did not believe that. At a time when the industry requires more and more Government participation and not less and less, surely it is the height of folly to embark upon the course that is advocated by the Secretary of State and his right hon. and hon. Friends.
It has been conceded that the construction of aircraft is becoming increasingly sophisticated, highly technological and costly. In such an industry the keynotes should be safety and reliability, not the necessity to make profits for shareholders. I suspect that it is the latter aspect which attracts the Government and leads them to take this step.
Who wants the Bill?

Mr. Onslow: We do.

Dr. Miller: But who wants it apart from the doctrinaire-ridden supporters of the Tory Party? The trade unions and the aerospace industry do not want it. That has been made clear through the Confederation of Shipbuilding and Engineering Unions. It expressed concern over the views contained in the Tory Party manifesto. At a recent conference of the CSEU it was stated:
The record of the failure of private ownership in aerospace, the motor industry and shipbuilding can give no confidence that such doctrinaire policies will assist any of these industries or companies like Ferranti, which have been restored by public enterprise.
The consequences in terms of job loss, failure to innovate and failure to invest that would arise from such policies would be entirely against the interests of the public or those of the workers directly affected.
The board of British Aerospace is not putting out the flags at the prospect of the Bill being enacted. The board stated:
We have stated already our views that the present corporate structure of British Aerospace is sound, and tribute has been paid to the progress made.
Indeed, the Secretary of State has paid tribute to that progress. The board continued:
Continuity of operation and concentration on the improvement of organisational efficiency would have been preferable without the uncertainty"—
that has been mentioned repeatedly and it is important—
and distraction of changes by Parliament.

Mr. Murphy: The hon. Gentleman has already mentioned the views of the unions and the board of British Aerospace. In both instances there has been reference to the stability of the organisation. Is not that exactly what the Bill is hoping to promote? Therefore, should not the hon. Gentleman be supporting the Bill rather than opposing it?

Dr. Miller: The hon. Gentleman would not be supporting the Bill if he did not take that view. However, I think that he is wrong. I am supported by the board of British Aerospace. It is the board's view that the present corporate base of British Aerospace is:
best fitted for the internationally competitive business of aerospace. For good commercial and industrial reasons we believe that the spread of products covering military aircraft, civil aircraft, space systems and guided weapons is desirable. All our major competitors share this view and act accordingly.
The board adds:
A major private holding or a dominant private holding would change the nature and national identity of the company.

Mr. Onslow: The remarks of the board and the unions on which the hon. Gentleman has been relying so heavily are surely no longer relevant as it has been agreed that the aerospace company, as it is now, is not to be broken up into component parts. All the arguments and disagreements to which he has referred are under the bridge. They have long since faded. As a matter of interest, what is the date of the statement from which the hon. Gentleman is quoting?

Dr. Miller: I am talking about how the board would see the development of a future company. It has stated freely that it is not happy about the changes that the Government propose. The views that I am putting forward are not held by myself alone.
The Government's proposals will not make it easier but more difficult for British Aerospace to raise the necessary external finance as the Treasury will no longer be guaranteeing such loans. Furthermore, private capital will seek to maximise its dividends in the short term. It is the short term which attracts Conservatives. That view is in conflict with the necessity to take the long-term outlook. My right hon. Friend mentioned that. He said that the Opposition were concerned about the longer term aspects


of the industry that are so important to the economy.
Clause 3(2)(a) states:
Shares issued in pursuance of this section . . shall be of such nominal value as the Secretary of State may direct".
If that is not a recipe for somebody being permitted to come in and make a killing, I do not know what is. The Secretary of State has total discretion to decide the nominal value of the shares. It will be a bargain for some, but it will be expensive when the industry is re-nationalised and we are faced with the possibility of paying compensation.
I was under some illusions about clause 7. I thought that there was a possibility of the Government retaining control of the new company. However, the Secretary of State has made it clear that the Government holding will be about 50 per cent. It could be less than 50 per cent. The size of the Government's holding does not really matter now. The right hon. Gentleman has made it clear that the Government will not control the company. That causes none of us any great feeling of happiness or joy.
I do not know how right hon. and hon. Members on the Conservative Benches feel about the part of the Secretary of State's speech that referred to foreign ownership, but I am not happy about it. I accept his good intentions, but if he intends to do what he has said this afternoon, I do not understand how we shall be safeguarded against the possibility of a powerful foreign influence, to say the least, a foreign Government or, as my right hon. Friend said, CIA Limited, KGB Limited or BOSS Limited. It does not fill me with any great happiness to know that there is a strong possibility that there could be foreign influence, and even foreign domination, of the aerospace industry, which is vital to us.
If the Bill is enacted, the consequences will be totally opposed to the statutory duties laid upon British Aerospace by the Aircraft and Shipbuilding Industries Act 1977. I do not believe that Conservative Members will be much worried about that.
The aero-engine part of the industry—namely Rolls-Royce—is linked to a strong airframe building sector. Rolls-Royce, as a nationalised company, could ensure Britain's position in the big league of

aerospace. It is no secret that there exists a problem between the National Enterprise Board and Rolls-Royce. The Secretary of State for Industry would love to abolish the National Enterprise Board. He would also like, I suspect, to return Rolls-Royce to private hands. My right hon. Friend pointed out tellingly how Rolls-Royce was in dire straits under private enterprise. When it was nationalised it began to develop by leaps and bounds. Rolls-Royce is now meeting with considerable national and international success. However, I should like to know whether what Rolls-Royce is doing now ties in with what the Secretary of State feels that he should be doing for British industry. I accept that he has the entrepreneurial outlook, the free-booting attitude of the nineteenth century and perhaps of a period earlier than that. I should like to know whether the setting up of Rolls-Royce subsidiaries in Atlanta and Miami in the United States, instead of expanding in this country, is part of the set-up which the Secretary of State for Industry envisages for the whole of industry in this country. Yesterday British Airways was handed to the wolves. British Aerospace will be handed to the wolves today. Will it be Rolls-Royce tomorrow?

Mr. Colvin: Who is the hon. Gentleman referring to when he says "the wolves"? Presumably he means the workers in the industry.

Dr. Miller: I mean the people—I do not care who they are—who will be able to pick up shares at a nominal value set by the Secretary of State.

Mr. William Clark: Is there not a fallacy in the hon. Gentleman's argument? He talks about the nominal value of shares. There is nothing in the Bill that says that shares will be sold at their nominal value. The shares might be issued at a premium, on a valuation. It is quite misleading for the hon. Gentleman to talk about the nominal value of shares as though people investing in the new company will make an immediate capital profit. That is a long way from the truth.

Dr. Miller: I am sorry if I misled the hon. Gentleman. I make the point clear that the discretion of the Secretary of State is involved. I am afraid of how that


discretion will be used. It is possible that the nominal value will be low. If it is not low, all right. I did not say that it would have to be low. However, I am worried about the power of the Secretary of State in that respect.
The Bill—simple, small and relatively unobtrusive, as the Secretary of State would like us to believe it is—is merely another indication of the kind of thinking which dominates the right hon. Gentleman and his colleagues. I am surprised that some Government supporters give it so much credence and feel that it is best for the country. They should know that that is not the situation that we have known in the recent past. The right hon. Gentleman, sincere as he is, is doing a disservice not only to British Aerospace—about which he had so many good things to say—but to British industry in general if he thinks that the only way to tackle the problems of British industry is to look at what previous Labour Governments did and decide, regardless of the principles involved, to do exactly the opposite.

Mr. Bowen Wells: I welcome the Bill. Quite contrary to what was said by the hon. Member for East Kilbride (Dr. Miller), it begins to preserve the flexible future of the workers in Stevenage and throughout British Aerospace plants. It is to be welcomed because it keeps intact the management structure and the working force in all the plants of British Aerospace. It frees British Aerospace to evolve in the future.
When we refer to British Aerospace, we should remember that we are talking about a highly technical industry which is moving at great pace. It is underpinned by people of extraordinary technical ability and tremendous scientific achievement. The Bill will enable them to exercise their initiative, and to progress the industry far beyond the vision of those trained in administration and even that of our most experienced Ministers and civil servants. The industry possesses the work force and the technical ability to push Britain into the future.
Fundamentally, nationalisation makes absolutely rigid the organisation of an industry, and indeed of any company that

it touches. For that reason, we have found ourselves with a backward and ill-equipped steel industry, unable to produce steel at a price that we can afford, so as to underpin the basic manufacturing ability of the country. For that reason, we are seeing our motor car industry basically going down and down, unable to compete with its competitors.

Mr. Stephen Ross: rose—

Mr. Wells: I shall give way after I have dealt with this point.
We were faced with the nationalisation of a dynamic industry. We believed that its future was gravely imperilled by the fact of that nationalisation. As we were vehemently opposed to that, we had to find a way out of the straitjacket imposed by the pursuit of doctrinal objectives by the previous Labour Government. They were determined to pursue them regardless of the future prosperity of the industry with which they dealt. That is the problem with which we are faced.
In proposing the Bill the Secretary of State for Industry considered how he could damage the industry least in terms of changing it from its nationalised state back into private enterprise hands. In the Bill he has evolved an interesting formula for doing that. He has left the management and the work force untouched by another change. The change to nationalisation was traumatic to the industry. It was destructive of the industry, which did not know where it was. There were constant reorganisations so that the workers were not getting on with their job of producing missiles and aeroplanes. Their attention was diverted. We do not wish to repeat that experience.
We have had to look for a way in which to find our way out of that situation so that there is not nationalisation, renationalisation and denationalisation going on all the time, thus destroying the whole fabric of the industry. Members of both Houses should have learnt a lesson from the nationalisation, denationalisation and renationalisation of steel and bus transport. That is totally destructive of the basic structure of an industry. It is demoralising, and it takes years to recover from it. We cannot afford that in the case of British Aerospace. We are not proposing to do so.
I spoke about this issue to the shop stewards committee in Stevenage. The reason I gave for reorganising the ownership of British Aerospace was basically that it would give the workers a future. Under nationalisation they had little prospect of a future. I said that it would give them a flexible future, in which their jobs would be secured. Indeed we look forward to the expansion of the industry.
Contrary to what the hon. Member for East Kilbride said, the dynamics division of British Aerospace is not totally dependent upon British Government contracts. Indeed, over 50 per cent. of its products are exported. It expects to get the figure up to 60 per cent. as a result of the initiative and dynamism of its sales people and the ability to produce high technological products of great quality and accuracy at the manufacturing plant in Stevenage. I believe that that is the base on which we can expand. Under the dead hand of Government we can expect it to slide inevitably downwards until it becomes non-competitive and non-dynamic and until the number of jobs at Stevenage gradually diminishes. That would be its future under nationalisation. It is the effect of the dead hand of nationalisation that we have to deal with.
We must get dynamism back into British industry. We must regenerate British industry and not destroy it by nationalisation. That is why we must get the Bill through before nationalisation has a further chance to seep into the vitals of the industry and destroy its morale.
Nationalisation is destroying the morale of the industry and of those who work in it. What was the major piece of legislation that caused that demoralisation? By common consent of the board of British Aerospace and of the unions, morale was destroyed by the doctrinal pursuit of Marxist aims contained in clause four of the constitution of the Labour Party, as exemplified in section 2(8) of the Aircraft and Shipbuilding Industries Act 1977, which stated:
In carrying out its functions under this Act, it shall be the duty of each Corporation to promote industrial democracy in a strong and organic form in its undertakings and the undertakings of its wholly owned subsidiaries".
Nobody would quarrel with that, but subsection (9) provides:

It shall be the duty of the Corporation to enter within 3 months of the relevant vesting date into consultation with the relevant trade unions as to the method which it would adopt for the purpose of carrying out its duty under subsection (8) above.
It did not strike Labour Members, when they included that stipulation in their Bill, that the vast majority of those employed in British Aerospace have nothing to do with trade unions. By putting those subsections into the Act the Labour Government disenfranchised the whole of the technical, scientific, research and management staffs from participation in the democratic control of that industry.

Mr. Les Huckfield: I see from the reference information that we have before us that the hon. Member is an expert on the Commonwealth Development Corporation. It is quite obvious that he spends a lot of time abroad. If it were otherwise, he would know that the trade unions concerned, whether manual or staff, were particularly enthusiastic and energetic in promoting, and participating in, industrial democracy. They are very enthusiastic that the corporation should remain in its present form.

Mr. Wells: I must say that I have to contradict you immediately on this, although I am—

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. The hon. Member is not contradicting me.

Mr. Wells: I refer of course, Mr. Deputy Speaker, to the hon. Member for Nuneaton (Mr. Huckfield). Thank you for your correction.
I have spent little time abroad since I left the Commonwealth Development Corporation in 1973. I spend a lot of my time in my constituency with the people who voted Conservative at the last general election. I meet them at British Aerospace, on their doorsteps, in the schools where their children are educated and in the colleges where they teach.
Contrary to what the hon. Member for Nuneaton asks the House to believe, everybody agrees that section 2 in the nationalisation Act of 1977 has produced, in spite of all the reorganisation, the maximum amount of dissent and demoralisation within the aerospace industry. Technical staffs have been busily organising their own union. Fighting


among themselves has resulted in political polarisation. They have been talking about that issue instead of ensuring how best to produce missiles and planes and beat the competition. That is how the effects of nationalisation undermine the industry. Nationalisation politicises the whole company, not just in relation to the House, but among whole communities within the nationalised industry. That is a destructive element.

Mr. Wilkinson: The Act to which my hon. Friend so appropriately refers was specially pernicious. Unlike previous nationalisation Acts, it granted to relevant trade unions rights of consultation which were never inscribed in statute in any previous measure. It was that fact which was specially divisive and wrong.

Mr. Wells: As my hon. Friend says, it debarred the people who created British Aerospace—the technical staffs who provide the work, the brain power and the vision upon which the industry depends for its future—from consultation with management. That Act produced that lamentable position and that is why we must, in the national interest, find another way to run the industry.
The industry is in a peculiar position in that its major customer is normally the Government. Seventy per cent. of the sales of British Aerospace as a whole—not in the dynamics group alone—are the result of Government contracts. Such contracts have, and will continue to have, a major influence on the way in which the industry conducts its affairs. Nothing will change. It was the same when Hawker Siddeley, GEC, and English Electric owned a part of the industry. Nothing has changed. Opposition Members speak as if nationalisation had built up this industry. It did nothing of the kind.
Nothing was ever built up by nationalisation. This industry, built up by private enterprise, has damn nearly been destroyed by nationalisation.

Dr. M. S. Miller: It was built up by the workers.

Mr. Wells: I agree that it was built up by the workers, and among the workers I include management, which the hon. Member for East Kilbridge may not. It

was they who created this industry under private enterprise.
The House must know that some of the most successful projects including the A300 Airbus were not supported by Government. The private enterprise company involved in the Airbus went it alone. That is why we still have a stake in the most successful civil air project ever undertaken in Europe. We would have missed that opportunity under nationalisation because nobody would have had the vision to initiate such a project.

Mr. Onslow: My hon. Friend is guilty—I put it to him gently—of understating the case. Not only was it Hawker Siddeley, a private enterprise firm, which took the risk in making the wings, but the then Minister of Technology, the right hon. Member for Bristol, South-East (Mr. Benn), did his utmost to make it impossible for the project to go ahead by withdrawing from negotiations with the French and German Governments upon whom it depended.

Mr. Wells: I thank my hon. Friend for reminding me of that. That is the sort of situation of which a nationalised industry would not be able to take advantage. That is why it is vital that the Bill goes through at maximum speed, so that we may know the future and can take advantage of these opportunities.
We are not only concerned with civil aircraft construction. The Vickers Viscount and the BAC 111 were both developed by private enterprise and the dynamics side of the industry has been developed in competition with the Americans and the French. We have developed weapons of greater potential and accuracy than any produced by our competitors and have managed to sell them abroad. We have made advances in design which the Americans cannot match.
The reason my constituents in Stevenage can look forward to a much more secure future, if the Bill goes through, is that we will achieve greater sales of Rapier, and greater sales from newly developing projects, because such projects will not be entirely dependent upon a nation impoverished by nearly 15 years of Labour government and unable to afford them. We are dependent upon customers whom we will find throughout the world. That will be given a tremendous dynamism under the new company.
We must also welcome the Bill because in consultation with the workers, management and trade unions we have responded, as a Government, to their request that we do not redivide the industry between dynamics and airframe. The most successful companies in this industry worldwide have a combination of dynamics and airframe. Boeing in America, Lockheed and McDonnell Douglas are obvious examples. They have combined both dynamics and airframe, whereas our industry, before it was nationalised, did not combine both. I hope that the new company, when it is formed, will take note that the profits at present come from the dynamics side—that is, from my constituents in Stevenage—

Mr. Stott: And from my constituents in Lostock.

Mr. Wells: I agree, but to a large extent they come from my constituents in Stevenage whom I represent in this debate.
In this House, one is quite often depressed and frustrated, but today I am elated that we are to put into effect legislation which will provide a future for expansion, and hope and anticipation for constituents. The company, when it is formed, will be able to start off on a new footing. I hope that the Minister concerned will make certain that he takes out any reference to the divisive industrial democracy clauses in the 1977 Act, and that he will make certain that the directors of the new company ensure that the dynamics part does not finance loss-making, Government-influenced airframe contracts. That does not mean that I believe that the HS146 may be a loss leader. I should like to see the former hon. Members for Welwyn and Hatfield and Hertford and Stevenage go into the world markets and be told to sell the HS146 and not come back until they have an order book for it. The previous Government's decision was a piece of political chicanery, undermining the electorate in a manner which is disgraceful in the annals of this country.

Dr. M. S. Miller: Is the hon. Gentleman aware that approximately 75 per cent. of industry in this country is already in private hands? Why does he not exhort these captains and princes of industry

to do with their goods what he suggests should be done in this respect?

Mr. Wells: We hope that because of the new dynamism introduced into this country, the new hopeful prospects—[Interruption.] Labour Members may laugh, but they produced the deplorable state of depression and demoralisation. That is why they are not sitting on the Government Benches today. The Conservative Party is providing the economic framework to enable people to work and produce, and have a hope of a future for themselves. That is the purpose of the Bill.

Mr. Stephen Ross: Interest rates are now 21 per cent. Every time I write out a cheque, Lloyds Bank chages me 17½p. Will that create the dynamic country about which the hon. Gentleman is talking?

Mr. Wells: Of course not, and nobody regrets that more than Conservative Members, but we must first—as every housewife throughout the land recognises—put our economic framework into order so that we can begin to get back on to a proper financial basis. It astonishes me that you can make that remark—

Mr. Deputy Speaker: Order. I wish that the hon. Gentleman would not put thoughts into my head or words into my mouth.

Mr. Wells: I apologise, Mr. Deputy Speaker. I am surprised that the hon. Member for Isle of Wight (Mr. Ross) should make such remarks. The interest alone on the money borrowed by the previous Government amounts to £10 billion a year. Of course the horrible rate of interest does not produce the dynamism that we want, but when we have put our house in order—and the country realises that we are working towards it—we shall start to put right what has gone wrong. We shall then have a future with hope. If we were to continue down the path on which the previous Government had embarked, this country would finish up once more in the hands of the IMF, and once more with wages lower than any other country in Western Europe.

Mr. D. N. Campbell-Savours: On a point of order, Mr. Deputy Speaker. What relevance have the hon


Gentleman's remarks to the Second Reading debate? I realise, Mr. Deputy Speaker, that you allow some liberty and flexibility, but there are hon. Members on this side of the House waiting to speak.

Mr. Deputy Speaker: I do not think that the latter remarks of the hon. Member for Hertford and Stevenage (Mr. Wells) were relevant to the debate, but the hon. Member has been provoked, mainly by sedentary interventions.

Mr. Wells: The problems with which we are dealing, which range more widely as I speak, are basically and fundamentally concerned with whether the company should remain nationalised.
The Bill deals with a reorganisation of the ownership of British Aerospace. We need that reorganisation, and I believe that the Bill will enable it to be done in a manner that does not destroy the current management structure and which enables that business to continue without interruption and to provide a future that is flexible and permits the company to evolve. It also permits the involvement of other companies that might have an interest in promoting the expansion of the company, which under nationalisation, they could not possibly do.
That is why we are ranging so widely on the issue of nationalisation and the way in which further State ownership and public borrowing have led to the depression and slough of despond which we were in in January this year.
I have not spoken of one of the most important growth areas of British Aerospace—the space element. The space department has one of the most brilliant teams of scientists and technologists in the company.

Mr. Palmer: On a point of order, Mr. Deputy Speaker. Could you tell me at what time the 10-minute limit on speeches comes into force?

Mr. Deputy Speaker: The time limit is not being implemented today.

Mr. Wells: I wish to refer to the space industry, because it is most important to the consideration of the Bill. The space industry is about to launch into its most exciting developments for many years. Again, this needs the dynamism and cosseting

of a privately owned company whose focus is totally on the success, and therefore the profit, of the company. That is another reason why the Bill should be welcomed.
I shall draw my remarks to an end in order to permit other hon. Members to speak. This is not because I do not have enormous enthusiasm for the Bill. I could go on speaking for many hours, but that would be impolite and discourteous to the House. It is with enormous satisfaction, which I express on behalf of my constituents, that I find the Government taking positive action to produce a dynamic company that can expand and provide a future for my constituents and so assist the regeneration of Britain that is badly needed.

Mr. Cyril Smith: I listened with great interest to the hon. Member for Hertford and Stevenage (Mr. Wells). It is a pity that he cannot enthuse the other Conservative hon. Members—all seven of them—who listened to his speech. I am sure that Conservative hon. Members are wildly enthusiastic about the Bill. That is evident by their absence.
I found the hon. Gentleman's speech extremely interesting, but, if he will forgive my saying so, in parts boring. I have heard it all before, from his side of the House and, based on different reasons, from the Opposition Benches. The hon. Gentleman argued, as Opposition speakers have already done, and will continue to do on all similar Bills, on the basis of political ideology. Hon. Members claim that if their approach is adopted everything will go well, but that if the other side has its way everything will go wrong.
The one part of the hon. Gentleman's speech that impressed me, and with which I agreed, was that containing his call for an end to party political bickering, dogma and ideology. That bickering occurred again this afternoon. The right hon. Member for Deptford (Mr. Silkin) declared what the Opposition intended to do when they returned to power. The response of Conservative Members should be "If they return to power" when I say that. That is the standard way in which this place conducts its affairs. So we go on, week in, week out, month in, month out, and year in, year


out. When we have the next Bill to unscramble a nationalised industry or to sell off shares in an industry we shall be confronted by the Opposition saying that when they return to power everything will be put right by unscrambling all that has been done.
There is an interesting side to this Bill in terms of political ideology. I appeal to the official Opposition to be aware of this fact. A major reason why my right hon. and hon. Friends and I intend to vote for the Second Reading is the interesting suggestion that the Government should retain a major holding in the company but that it should not be a nationalised company. This is not a new approach, but it is an interesting development of a method that has been tried infrequently in the past.
I also commend to the official Opposition the Government's determination to give preferential treatment to workers in the industry who want to buy shares in the industry. That is worthy of commendation and of serious experiment in a major industry in this country. My colleagues and I await with interest an explanation, which I imagine will be forthcoming in Committee, of how the Government propose to give priority, or preferential treatment, to workers. The Secretary of State said that the Government's proposals would become more evident as the weeks wore on. We await that information with great interest, and, especially on the Liberal Benches, with some enthusiasm. This may be a way of creating not only new methods of financing industry but, more important, new methods of improving industrial relations within the industry. Improved industrial relations are necessary in all industries.
From that point of view, I commend the Bill. There is an element of a gamble, which is whether private industry and employees will invest the capital that the industry needs and that is needed if this mix of shareholding is to take place. It is certainly worth a try. I very much hope that it succeeds. Success will depend upon how the share capital is subscribed, and by whom. In that respect, I wish the Government well, and I wish the Bill well.
The Government should not overlook the fact that the major need of this industry, more than of any other industry, is always for vast sums of money to be

invested in technical development and experimentation, with a view to creating new markets and new aircraft, and new ideas that can be sold not only in this country but throughout the aircraft industry abroad.
I do not profess to be an expert on the industry. That is why I have said little on the subject until now and shall continue to say little about it as the debate progresses. My information is that the amount of money needed to develop a new project is phenomenal. I have heard figures as high as £2 billion quoted in relation to the Airbus by a person who is highly knowledgeable about these matters.
The doubt of many hon. Members is whether this industry in private hands, or even with part of it in private hands, can attract and make available the amount of capital that it requires for technological development. That is why I say that this experiment may or may not succeed. As the hon. Member for Westhoughton (Mr. Stott) said earlier, launching capital is necessary for new projects.
It would help those who are prepared to support the Bill if an assurance were given at some stage of the Bill's passage that Government assistance will not be lacking. To be fair, the Secretary of State said in his opening speech that he had the right, by law, to make such capital available. The right hon. Gentleman went on to say that it was doubtful whether, in the present state of the nation's economy, capital was immediately available, but that, none the less, he had power to make capital available. I should like an assurance that the Government will not hesitate to use those powers if they can be convinced that to do so is in the best interests of the industry and, consequently, of the nation as a whole.
That is as much as I need, or want, to say about the Bill. It is an experiment. We are deciding to sell a major industry, or a large proportion of it, to private ownership. That is, in itself, not a bad principle. I am not keen on monopolies in industry, but this industry has a monopoly only in national terms. Internationally, it faces great competition. This is an experiment to see whether sufficient capital can be attracted to create a partnership between the Government and the


wider public. More important, it is a partnership between employees, acting as shareholders, and the Government together with other shareholders, who may not be either employees or the Government, but who are anxious and willing to invest in an industry that we hope has a great future.
We shall support the Bill, although we are not certain that the experiment will succeed. We can form a view only when we see how share capital is subscribed. But we believe that the Bill is worth the effort. For that reason, we shall vote for giving it a Second Reading.

6 pm

Mr. Robert Atkins: I make no bones about the fact that from the word "Go" I warmly welcome the Bill. Despite what Labour hon. Members have said, it honours a Conservative Party manifesto commitment, and we are proud to honour it.
Before nationalisation the aircraft industry was successful. I am convinced that the successor company to British Aerospace will be successful after the Bill becomes law. The right hon. Member for Bristol, South-East (Mr. Benn) once said, referring to the aircraft industry, that if every industry in the country exported half its production, we would have no problems at all.
The question that must be posed when we think about the Bill and about nationalisation of the aerospace industry is: has nationalisation improved the industry's performance, as was promised by the proponents of nationalisation? The answer is clearly "No". Nationalisation was simply an act of political spite, resulting from the ideological hand-ups of Labour Members.
When Labour hon. Members refer to trade union leaders and the work force, I remind them that at the time of the nationalisation proposals in Preston alone 2,000 or more shop floor workers signed a petition expressing their opposition to nationalisation of their industry.
I can speak as one who is in the same position as my hon. Friends the Members for Welwyn and Hatfield (Mr. Murphy) and for Hertford and Stevenage (Mr. Wells). The proof of the pudding is in the eating. Great election victories were gained in certain seats where aerospace

played a large part, because of the views that we represented.

Mr. Stott: The hon. Gentleman has the wrong name.

Mr. Atkins: I am afraid that that canard was disposed of a long time ago. The hon. Gentleman does not have a great deal to crow about. He had one of the largest Labour majorities in the country, which was cut substantially. His is now a marginal seat.
I do not discount the labour leaders. They are part and parcel of any discussion about industry, but I like also to listen to the voters, the people actually working in the factories. Their view is not always quite the same as that represented by their trade union leaders.
I should like to deal with the argument that is advanced in relation to the Government's being the biggest customer of British Aerospace. When that argument was put forward during the original debate and discussions it was perhaps not dealt with as strongly as it should have been, and I should like to deal with it now.
The alternative to building aircraft in this country was to buy them from abroad, as had to happen as a result of the cancellation of the TSR2. Labour hon. Members might like conveniently to forget that cancellation, which caused a great deal of unease and annoyance, to put it mildly, in Preston some years ago. If we had continued with the TSR2, we should not have had to buy foreign aircraft at great expense to the British Exchequer. Having to buy abroad means a loss of employment. That does not happen if we build equipment in this country.
The popularity of the Tornado, which is soon to come into service with the Royal Air Force and the German and Italian air forces, is an indication of what productivity and ingenuity can provide through the military aircraft division, based in Preston.
Nationalisation ignores, and has ignored, the export achievements of the aircraft industry. I take for example two contracts that have brought and are bringing substantial amounts of foreign money into this country. The first is the contract with Saudi Arabia and Oman, worth nearly £1 billion in exports. The


second is the contract to sell Jaguars to India, which should eventually bring in about £1 billion.
I should like to know when the Tornado will be made available for export. I have put a question to my right hon. Friend the Secretary of State for Defence, who has indicated that there is interest and that in due course we may be able to sell it. I hope that that will be so.
The benefits to this country of the achievements of the British Aircraft Corporation, as it used to be called and as I prefer to call it, are many and various. There are, for example, the worldwide technical prestige of the work that the aerospace industry has created; the technical fall-out, so called, that has resulted from developments; the contribution to defence and exports, and reduction in imports; the training and exploitation of engineering skills; the employment that the industry has created in various parts of the country. Above all, there is the contribution in direct and indirect taxation that has resulted from the activities of companies involved in the industry. All in all, they have been excellent value for money.
When nationalisation was proposed and argued there was much reference in a document produced by proponents of nationalisation to cancelled projects. The proponents said that they would produce a list of them as evidence for their case. No such list has ever been published. I wonder why.
I know that most Governments have been guilty of a lack of forward planning. That is one of the problems that democratic government faces. But BAC has shown recently, and in the more distant past, evidence that it is prepared to use brainstorming exercises to test the credibility of design, products and so on. At present, for example, work is going ahead on the design of carbon-fibre wings. There is already co-operation with overseas firms in this area. We have heard references to the Hawker Siddeley Aviation contribution to the Airbus wing, and rightly so.
Incidentally, the aircraft industry has sometimes had to face difficulties in its relations with the Government. I was not around at the time, but I understand that the manufacture of the Spitfire and Hurricane was not quite as popular at the

time as we are led to believe by their place in history.
I want to emphasise, as did my right hon. Friend the Secretary of State for Industry in opening the debate, that there are no proposals to break up the company. That is a key point, a bull point. There is nothing to fear and everything to be gained. The shares will be made available to those who want to buy them. That means those on the shop floor, trade union pension funds and—I hope, in my constituency case—people in Preston, and perhaps even Members of Parliament. I hope that I shall be one of the first in the queue when the shares are made available, so that I may show that I am concerned about the company in my constituency and show faith in it.
One labour attitude is represented by the general secretary of the Association of Scientific, Technical and Managerial Staffs, of which I am a member. My trade union boss has shown himself to be a very silly man by his comments in his own journal and at the Labour Party conference. I suspect that I am not alone in that judgment.
It could be thought that the representatives of the work force in the companies generally, the supporters of British Aerospace, have more to fear from Labour hon. Members than from us. I can do no better than to quote from the Labour Party manifesto, which contains the following commitment:
We shall continue with our plans to reduce the proportion of the nation's resources devoted to defence".
It follows that if that were done other things would also happen.
Again, I can do no better than to quote from the right hon. Member for Stockton (Mr. Rodgers), then Minister of State for Defence, who told the House in 1976 that
it is not possible to make massive cuts in defence without consequences on equipment, and it is not possible to make massive cuts in equipment without the loss of job opportunities."—[Official Report, 15 June 1976; Vol. 913, c. 300.]
The effect upon the aerospace industry is clear.
The right hon. Member for Barnsley (Mr. Mason) said in 1974, when he was Secretary of State for Defence:
Cuts in defence expenditure sound simple enough … but if tomorrow's realisation reveals


you are unemployed, you won't then be so keen".
That is the reality of defence cuts.

Mr. Les Huckfield: I hope that the hon. Member for Preston, North (Mr. Atkins) will read the next sentence in that manifesto, which says:
A Labour Government would plan to ensure that savings in military expenditure did not lead to unemployment for those working in the defence industries.

Mr. Atkins: I can only say that that matter did not meet with a great deal of acceptance in Preston.
Perhaps I could refer briefly to what members of management have to say, because I have a number of them living in my constituency, as well as members of the work force. I have five points to put forward. When I refer to management I mean everyone above the shop floor, and not just the directors. Indeed, some of the directors are members of the Labour Party.
I know that management welcomes the fact that there will be no break-up of the entire corporation, which is now to become a company. It welcomes the maintenance of a total capability. Indeed, there are only four countries in the world with this total aerospace capability. Management welcomes the continuance of Government participation in British Aerospace Limited—as it will be—the opening up of commercial opportunities and the maintenance of stability within the industry. Equally, management welcomes the long-term commitment to projects such as those involved with the continuation of the development of the Tornado and, indeed, the probability of air staff target 403.
Finally, I can do no better than quote from the document that was referred to earlier in relation to the management of British Aerospace, which spoke of
A minority shareholding"—
which we have not yet decided—
spread across a wide section of the nation, including the British Aerospace work force, could increase the involvement and interest of the British public generally.
That seems to me to be a fairly clear welcome and acceptance for what my right hon. Friend has put forward in the Bill.
British Aerospace is a great company, has a great work force and is making great products. I hope that there is no difference of opinion in the House on that. I can speak specifically only for my constituency and the three factories in Preston. The industry is very successful in Preston, unlike some other areas. It is making substantial profits, and it always has done. I see no threat to its continuing to do so because of the proposals in the Bill. Indeed, quite the reverse. I look positively to the future.
During the recess I was fortunate enough to visit the United States of America where, with the assistance and co-operation of British Aerospace, I was able to meet some members of the work force and executives at the Grumman company. [HON. MEMBERS: "Freeloading."] I had better make no comment on that. My visit was at the behest of the British-American parliamentary group, of which I suspect hon. Members of both sides of the House are members. However, I was fortunate enough to visit the Grumman Corporation, which has an arrangement with British Aerospace about aspects of the development of carbon fibre wings, to which I referred earlier. I have also observed the continuation of Panavia, the trinational company which exists to build the Tornado.
That sort of development for the future assures co-operation, which ensures the maintenance of the work force and, we hope, more jobs. It also ensures that development of our defence capability is forward-looking, productive and as realistic as the present Tornado project. When talking to members of the Royal Air Force I have been made aware of how much they look forward to the Tornado coming on stream in due course, particularly the air defence variant.
The Bill poses no threat—quite the reverse. It is a positive and substantial step forward in the interests of the company, the products, the work force and the shareholders-to-be. It ensures employment for a large number of people, and I hope that it will continue to do so. The Bill is to be welcomed. I have no hesitation in welcoming its presentation and wishing it god-speed.

Mr. Roger Stott: The hon. Member for Preston, North (Mr. Atkins) referred to my constituency. I


should inform the hon. Gentleman that Westhoughton has had a Labour Member of Parliament continually since 1906 and will continue to have a Labour Member until the boundary commissioner does his worst. I have no doubt that my hon. Friend the Member for Preston, South (Mr. Thorne) will take up some of the other points made by the hon. Member.
I do not want to take issue with the hon. Member for Preston, North, but in my constituency I have a large—I suspect the largest—dynamics factory in the British Aerospace Corporation. Over the past six and a half to seven years I have made it my business to go to that factory on a regular basis, and I have an open and free dialogue with the work force and the management. I have meetings with them on a regular basis, the latest of which took place last Friday. Therefore, I believe that I can say without fear of contradiction that I have a fair idea of the views of the people whom I represent and who work at British Aerospace, Lostock.
In addition to my constituency interests, I had the pleasure of serving my right hon. Friend the Member for Chesterfield (Mr. Varley) in the Department of Industry throughout the period when the Aircraft and Shipbuilding Industries Bill went through the House of Commons. I, and 28 other hon. Members, found ourselves in the Guinness Book of Records.

Mr. Robert Atkins: Join the club.

Mr. Stott: We spent more time in Standing Committee—there were 58 sittings of that Committee—than anyone has done in the history of this House. Those hon. Members who were involved—I see that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) has arrived, and he was one of them—in Standing Committee D and the debate that we had in the Chamber will readily agree that the debates were protracted, difficult and rancorous. It is in that sense that I can claim to have invested a good deal of my parliamentary life in getting the Aircraft and Shipbuilding Industries Bill on to the statute book. Naturally, I am concerned that all our efforts in the previous Labour Government to create British Aerospace will be tampered with today by the introduction of a Bill that does nothing more than give vent to the Secretary of State's

ideological spasms. Let us consider the arguments—

Mr. Colvin: The hon. Gentleman has referred to ideological spasms. If he was on that Standing Committee dealing with the measure that became the 1977 Act, he will remember the statements by his right hon. Friend the Member for Mancester, Ardwick (Mr. Kaufman). He may have been surprised this afternoon when his right hon. Friend the Member for Deptford (Mr. Silkin), when giving four reasons why it was necessary for the nationalisation of the aircraft industry to proceed, omitted what his right hon. Friend the Member for Manchester, Ardwick stated in that Committee, namely, that one of the prime reasons was to forward the frontiers of Socialism. Is that a good idea, and does the hon. Gentleman support it?

Mr. Stott: Of course it was a good idea, and I supported it at the time. Indeed, what I was about to do before the hon. Gentleman interrupted me was to deploy the arguments that were advanced by my right hon. Friend the Member for Deptford (Mr. Silkin) in the Chamber and, indeed, by my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) during the debates in 1975 and 1976. My right hon. Friend the former Secretary of State—

Mr. Deputy Speaker: Order. Before the hon. Member does that, I think that he should bear in mind that we are debating this Bill and not that one.

Mr. Stott: Indeed, Mr. Deputy Speaker. I should not wish to incur your wrath, but I think that it is important for the House to recognise the validity of the arguments that were used at that time, so as to debate the merits of this Bill. If I do not stay within the bounds of order, Mr. Deputy Speaker, I am sure that you will tell me. What I want to do is to indicate to the House, or to those hon. Members who were not in the House while that Bill was proceeding, the reasons on which my right hon. Friend based his arguments.
My right hon. Friend said that if BAC and Hawker Siddeley were to combine this would further Britain's ability to collaborate with its European and American partners. In fact, he referred to the 1964


Plowden committee report. Even as far back as 1964 that committee suggested that it would be beneficial for the aerospace industry if BAC and Hawker Siddeley were to merge. That merger took place only as a consequence of public ownership. It did not happen of its own accord, and I suspect that it would not have happened had the industry been left to its own devices.
Over the past three years there has been clear and proven evidence that the Labour Government were right to bring British Aerospace into public ownership. There is overwhelming evidence to show that that was correct. Before nationalisation no major airframe development would have been possible without massive amounts of Government launching aid. I hope that the Under-Secretary will take note of this. As the hon. Member for Rochdale (Mr. Smith) said, we need to be satisfied on the question of launching aid. We shall probe this matter in Committee.

Mr. Colvin: The hon. Member referred specifically to Government aid for the industry. Will he accept that up to the period to which he has referred 90 per cent. of the aid that the Government gave to the aerospace industry went to the RB211 engine and the Concorde, both of which were Government projects?

Mr. Stott: If the hon. Member would only contain his impetuosity, I shall come to that point.
In the military field the two main companies, BAC and Hawker Siddeley, were in receipt of millions of pounds of public money, which was channelled through the Ministry of Defence procurement division. The case for the creation of a unified aerospace industry in public ownership was entirely logical not only on the ground of ideology—and that is often borne out by practical experience—but on the grounds of commercial viability, design, continuity of employment, corporate planning and job security. These measures were essential for an industry that was facing the enormousness of escalating design and production costs.
No aerospace company anywhere in the world today could embark upon a new generation of aircraft production on its own account. International co-operation is required and is now taking place.
There are international ventures between British Aerospace and the French, the Germans, the Italians and the Americans. Above all, British Aerospace needs to operate in art atmosphere of stability and continuity.
I was interested to read the press statement put out by the Minister of State when the Bill was first published. He said:
By introducing the disciplines of the market place, and by ending the blurring of commercial objectives—whch is one of the inevitable consequences of nationalisation—the new company will be made fitter, more efficient and more capable of surviving profitably in highly competitive world markets.
Those words
by introducing the disciplines of the market place
are strange and rather stupid. Is the Minister of State not aware that prior to vesting day the British aerospace industry had received £1,700 million of public money? The Spitfire, the Hurricane, the Canberra, the Hunter, the Lightning, the Jaguar, the Harrier and the Concorde were all developed under direct Government contract. That means that the Government paid the development costs. Other aircraft, such as the Comet, the Viscount, the VC10 and the Trident, were developed with Government launching aid. There seemed to be a strange absence of the disciplines of the market place when those projects were first being developed and produced.
If we read the speech of the present Secretary of State for Industry on the Second Reading of the Aircraft and Shipbuilding Industries Bill on 2 December 1975, we see that he said:
The Bill will threaten decline to the industries concerned … Those two industries and all those dependent upon them will be made worse if this Bill goes through."—[Official Report, 2 December 1975; Vol. 901 c. 1572.]
That Bill went through and the evidence that we have today shows that the right hon. Member was wrong. This is borne out by the 1978 accounts of the British Aerospace board.
The right hon. Member for Henley (Mr. Heseltine), when he was Opposition spokesman for industry, went a great deal further. He gave a commitment in Committee and on Third Reading that when the Conservative Government were returned to office they would denationalise


British Aerospace and flog off its assets to the private sector.

Mr. Colvin: rose—

Mr. Stott: No, I will not give way again. If the hon. Member reads the Hansard reports for the 58 sessions of the Standing Committee he will find ample evidence of this denationalisation commitment by the right hon. Member for Henley, but this Bill does not do that. In fact, it is a pale, watered-down imitation of the Bill that the right hon. Member for Henley threatened us with on the return of the Conservative Government.
This Bill represents a U-turn on the part of the Secretary of State. It would appear that the realities of office have curbed the more idiosyncratic excesses of the right hon. Gentleman. The Bill keeps intact the structure of British Aerospace, and I welcome that fact. One can only conclude that the Secretary of State has been converted from his original thinking, which he made clear on 2 December 1975, to a more rational posture. By virtue of this Bill the Secretary of State concedes and accepts that our arguments were right and that we were correct in creating British Aerospace under public ownership. The right hon. Gentleman need not feel embarrassed about this. Many people have trod the Damascus road before him, and many will tread it again.
If the structure of the industry is to remain intact, the work force in my constituency is entitled to ask why the Secretary of State is creating unnecessary uncertainty. Why is he messing about with an industry that is functioning well and making profits in the national interest? The answer to that question is that the Secretary of State must prove to the Tory Party outside and to his hon. Friends on the Back Benches that he has not completely abandoned his stone-age belief in a free market philosophy.

Mr. Tom McNally: My hon. Friend has mentioned the opinions of the work force in his constituency. Is he aware that those views are shared by the British Aerospace workers at Woodford and by those who work in the other 16 British Aerospace plants?

Mr. Robert Atkins: That is not true.

Mr. McNally: From a totally recumbent position, the hon. Member for Preston, North (Mr. Atkins) seems to know about a different view.

Mr. Robert Atkins: I spoke when the hon. Gentleman was not here.

Mr. McNally: I suspect that if the hon. Gentleman were to check with his own workers he would find that the opinion to be found in the 18 British Aerospace plants is that the Government are causing uncertainty for no reason. I am interested in my hon. Friend's comments about that.

Mr. Stott: My hon. Friend the Member for Stockport, South (Mr. McNally) is right to defend the views of those whom he represents. There may be some misunderstanding about the information that the hon. Member for Preston, North has received.

Mr. Robert Atkins: I talk to workers, not just to trade unions.

Mr. Campbell-Savours: He may very well talk at them.

Mr. Stott: The Bill demonstrates to Conservative Members that the Government have not completely abandoned their stone-age belief in the free market. Instead of selling off all the assets of British Aerospace, the Government intend to sell only half of those assets—or so we are given to understand. We need more clarification about that.
The Government hold a fundamental belief that there should be less State interference in industry, and therefore the inclusion of clause 5 is quite remarkable. It states:
The Secretary of State may at any time, with the consent of the Treasury
—what an unholy pair the Secretary of State for Industry and the Chief Secretary to the Treasury make—
(a) subscribe for or acquire ordinary voting shares in the successor company; or … take up or acquire securities of the successor company which are convertible into ordinary voting shares or rights to subscribe for any such shares … carry voting rights at general meetings of the company; and … carry a right to participate in any distribution (whether of dividends or of capital) without limit as to amount.
If that is not direct Government interference in industry I do not know what the term means.
I believe that the Bill is unnecessary. It creates unnecessary uncertainty in a profitable industry that I am proud to represent in the House of Commons. British Aerospace has in my constituency a factory that employs a great deal of skill and a wealth of knowledge, and it does an excellent job for the country. The only reason for the Bill is to satisfy some of the more rampant members of the Tory Party by flogging off bits and pieces of national assets. We shall resist the Bill on the floor of the House and in Committee, because it does not make sense. No doubt shop-floor workers throughout British Aerospace will resist the Bill as well.

Several Hon. Members: rose—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Mr. Michael Colvin.

Mr. Michael Colvin: rose—[Interruption.]

Mr. Robert Atkins: My hon. Friend knows what he is talking about.

Mr. Colvin: I would have thought that it was unusual to be interrupted before having said a word. I appreciate the noises made from the Opposition Benches because I have been on my feet several times during the debate. I hope that the contributions that I have made have been of some use. I think that Conservative Members will agree that it has been a good start to the week for aeroplanes and for all those who develop, design, construct, market, fly, maintain and repair them.
Yesterday the House took its first steps towards freeing the British civil aviation industry from too much Government interference and control and began the process of handing back to ordinary working people some of the wealth, power and responsibility collected at present in the hands of the State. Tonight we take yet another step towards freedom—this time backed by a specific manifesto pledge. We shall reverse one of the most dogmatic and doctrinaire pieces of legislation ever to be passed.
The Aircraft and Shipbuilding Industries Bill became law in 1977 after record sessions in Parliament and in Committee. I remember at least one case of attempted

cheating by Labour Members in order to avoid defeat. That debate achieved a privileged place in the Guinness Book of Records and we do not want to see that record broken.
Yesterday the Opposition made much play of the fact that we had not mentioned our plans for British Airways in our general election manifesto. The same criticism cannot be levelled today.
The Secretary of State and the Under-Secretary of State my hon. Friend the Member for Arundel (Mr. Marshall) both know that the wording of that manifesto pledge went down like the proverbial lead balloon in my constituency, and in many others containing aerospace interests because it did not say enough. It did not say anything about how the denationalisation would be handled. It did not confirm that the recently reorganised structure of British Aerospace was to be preserved. We are delighted to say that now. If that had been mentioned in the manifesto, it would have spiked the guns of those scaremongers who said that the Tories would carve up the corporation and sell the more profitable bits to private enterprise.
The 11 most marginal Labour constituencies before the general election that contained substantial British Aerospace interests—such as my own constituency—were all won by the Conservatives. We then had the added bonus of my hon. Friend the hon. Member for Hertford and Stevenage (Mr. Wells). That seat was not marginal, but it became a Conservative one.

Mr. Palmer: I am sure that the hon. Gentleman is not suggesting that all aerospace workers live in Bristol, North-West.

Mr. Colvin: Certainly not, but if the hon. Member would let me continue he would understand my point. I am not a great believer in mandate politics, but if a mandate were needed those general election results provide one. If the ordinary working people in those constituencies wanted to prove that the proposals in our manifesto were correct, they have done so by returning myself and the majority of my hon. Friends from marginal constituencies.
The general election result was proof, yet again, that clause four of the Labour Party constitution is a vote loser in saying that the Government should take into


public ownership the means of production, distribution and exchange. The Labour Party would not be facing the prospect of another 10 years in the political wilderness if it had had the sense to adopt the advice of the late Hugh Gaitskell and repeal that part of its constitution.

Mr. Sheerman: In the interests of social science and of pushing back the frontiers of this kind of inquiry, perhaps the right hon. Gentleman could stand down from his seat so that we could have a by-election to test the success of his Government's measures so far?

Mr. Colvin: I thank the hon. Member for the promotion that he inadvertently gave me. No doubt it was a Freudian slip. However, as he knows, it is a rather silly suggestion. He should bear in mind that perhaps a general election result does not specifically cover the point that he has made. Since the general election several opinion polls have been conducted, and they have shown conclusively that the people of Britain do not like nationalisation and, furthermore, that majorities of specific workers in industry, when asked whether they would like to see their particular firm nationalised, have said "No". Therefore, if there were a referendum on this item, perhaps that would give the House a much fairer idea of the public's attitude towards the nationalisation issue, and particularly clause four of the Labour Party's constitution, which I believe will be a millstone around the Labour Party's neck for many years to come.
I have been extremely pleased to see that British Aerospace itself has reacted most favourably to the Government's proposals. It has said:
A minority shareholding spread across a wide section of the nation, including the British Aerospace workers, would increase the interest and involvement of the British public generally … we have made clear already our view that the present corporate base of British Aerospace is best fitted for the internationally competitive business of aerospace. … We were glad to learn that it was the Government's strong purpose to maintain the present structure of the industry.
That statement was made by British Aerospace on 13 August 1979.
There is surely one man—I am glad that the hon. Member for Westhoughton (Mr. Stott) mentioned him—who must be

more pleased than most by the Government's proposals. That is Lord Plowden, whose committee was set up to review the aircraft industry at a very difficult time, following the cancellation in 1964 of three major projects, including the TSR2, by the then Labour Government. I cannot believe that that cancellation was particularly good for the morale of the aerospace industry. Perhaps I should say "the British aerospace industry", because I am sure that it was extremely good for the morale of those workers in the United States who were then manufacturing the F111.
At that time Europe was emerging as a major competitor to our industry and we had to decide whether to co-operate with the Europeans in order to compete more effectively with the United States. We had the advantage of a large domestic civil aviation market, but I remind hon. Members that at least half of the civil aircraft flying in the world today fly within the United States on domestic routes. Also, the United States has the advantage of a mammoth defence industry, and both this and the civil side help to absorb the research and development costs of the United States aerospace industry.
The Plowden report came out eventually in 1965. It concluded that there was no predestined place for the aircraft industry in Britain and that Government support should be reduced. Almost all of the report's major recommendations have now been implemented. It recommended further European co-operation. That we now have, on both the military and the civil sides. The report also recommended a sustained export drive to the United States, particularly in military products. That we now have. I hope that the Rapier guided missiles which Iran will not now have because of the troubles in that country, will one day be sold to the United States. There is a ready market for them. The United States has found that the product which it is testing as a surface-to-air missile is not particularly effective. We look forward to opening up markets for British products in the United States now that the American Congress has done away with the "buy American" policy and has substituted instead the principle of what is known as the offset.
Plowden also suggested that we should consider buying defence systems from the United States only if the research and


development costs of proceeding with our own systems in Britain were uneconomic. That again is something that now happens.
However, there was one recommendation in the Plowden report which was particularly important from the point of view of this debate. The report recommended the purchase by the Government of shareholdings in the British Aircraft Corporation, as it then was, and Hawker Siddeley Aviation Limited. This was to remove from the companies the heavy weight of technical and financial Government control, which was seen
to prevent efficient and dynamic management.
No size of shareholding was recommended by Plowden, although a majority of the committee wanted the Government to purchase over 50 per cent. Plowden, therefore, ruled out complete nationalisation. The committee was against it because it would prevent participation by private enterprise and capital. As the report stated:
The ability to raise fresh capital from the market provides a test of sound management and commercial promise of projects.

Mr. Les Huckfield: If the hon. Gentleman reads the Plowden report very carefully—instead of only the summary of it, which he has obviously done—he will learn that a majority of the Plowden committee wanted to see nationalisation of the aircraft industry but realised that the solution that the hon. Member is describing would probably have to be the one decided upon because there would not have been time to get legislation through the House in time to save the British Aircraft Corporation.

Mr. Colvin: I am grateful for that interjection, but I do not think that I interpret Plowden in the same way as the hon. Gentleman does. I have read the report from cover to cover. We were in contact with Lord Plowden before the debate on the Aircraft and Shipbuilding Industries Bill. I feel that the recommendation that I have just put forward on the shareholding was fair.
The point is that Plowden did not go further on the shareholding but said that the Government should have a shareholding. What the committee could not agree upon was whether the Government

should own over 50 per cent. of the shares, or less than 50 per cent. Plowden did not make a specific recommendation of a percentage of shares that the Government should hold.
Perhaps I may continue by referring to something else that Plowden said as the reason for the decision on a Government shareholding and a shareholding in the joint company by free enterprise. Plowden said that the commercial promise of projects
would disappear under full State ownership and would be difficult to replace. It would be a mistake to forfeit the use of this test while there is any prospect of retaining it.
The key to the Plowden report is contained in that last quotation. That is why I feel that Lord Plowden must be a happy man this evening to see that not just one of his recommendations has been implemented but most of the others as well.
However, to be fair to the Opposition, who will find me in these debates a most reasonable man, I think that there are some who doubt whether the two main aircraft companies, BAC and Hawker Siddeley, would yet have come together. Mergers have been discussed between them for many years, under Labour Governments and Conservative Governments, but nothing ever materialised. Therefore, the nationalisation Act of 1977 has brought about a shotgun marriage where a love match had failed.
The rationalisation and reorganisation that has followed has resulted in a corporation that is not only an international leader but is capable of contributing an enormous benefit to our economy, with exports running at well over £½, billion and saving considerably on Britain's import bill.
It is worth noting in passing that the conversion ratio of raw materials into finished products in the aerospace industry is one to 10. That means that for every £1 worth of raw materials that goes into the factory, £10 worth of finished product comes out. For a country like ours, which is poor in raw materials but rich in technological skills and inventiveness, this is precisely the kind of industry that we should be encouraging to expand.
During yesterday's debate the House spent some time discussing the effects of the British Airways sale of shares on the public sector borrowing requirement. Labour Members would probably like to have a re-run of that debate, but before doing so they ought to hear what their own shadow Chancellor, the right hon. Member for Leeds, East (Mr. Healey) had to say in September 1976 about the relationship between the Labour Government's nationalisation programme and the public sector borrowing requirement.
On Thames Television the right hon. Gentleman was asked what Labour's programme for Britain would cost. I believe that the Conservative Opposition at the time had put the Bill at £10,000 million. "No," said the right hon. Member for Leeds, East,
that is absolutely ridiculously high.
Whether he meant the Conservative estimate or the Labour estimate was too high I do not know. He went on to say:
The speed at which we take over the industries which we are going to take over will depend partly on the problems of accommodation, the implications for the gilt-edged market and the Government's borrowing requirement … The central point about the acquisition of assets is that it can create problems for management of Government debt, and therefore the way in which you phase this in is a matter of greatest concern to the Chancellor with his responsibility for looking after the Government's borrowing requirements".
Those are pretty sound words from the Shadow Chancellor of the Exchequer and I wish that hon. Members opposite would read them, because I think that they put the case as well as anyone on this side could have done for what we are trying to do with regard to the public sector borrowing requirement.
Perhaps I shall be forgiven for making a rather parochial plug, as other hon. Members have done, for the aerospace industry in and near my own constituency. The aerospace complex in Bristol encompasses both British Aerospace and Rolls-Royce Ltd. Now that the flight test facilities have been moved from Fairford to Filton, the Filton patchway complex is probably the most advanced and most comprehensive aerospace centre for the design, development and manufacture of aircraft and aerospace products in the world.
British Aerospace's civil aircraft works at Filton have been concentrated for many

years on Concorde, and in spite of some rather disparaging remarks made yesterday about that project I point out to the House that the total net spending on Concorde by the United Kingdom will probably reach about £900 million by 1983, and that the United States of America has spent considerably more than that but has never got any further than the wind tunnel models. We have an aeroplane which is a leader in its field, which has pushed forward the frontiers of technology, and from which there have been considerable spin-off benefits to aerospace and to other industries.
Talks have been going on for some time between McDonnell Douglas and British Aerospace on an advanced supersonic transport, the AST, and an agreement has been signed covering co-operation on design studies. It is regrettable that the Government have inherited such an adverse economic situation that it is necessary for Ministers to say that they can merely take note of these preliminary studies that in future any Government spending will be concentrated on subsonic aircraft, and that no additional money will be provided by the Government for these super Concorde studies.
If that statement represents Government policy—and perhaps my hon. Friend the Member for Arundel (Mr. Marshall) could touch on this when he winds up the debate this evening—I feel that they have got it wrong. I see no reason why the Government should take any part in investing in development or research for subsonic aircraft, but I see every reason why the Government, in conjunction with both our European partners and the United States' aerospace industry, should take part in the research and development of new technology, such as a longer-range higher-capacity version of Concorde, perhaps in the same way as the NASA programme is conducted in the United States.

Mr. Wilkinson: My hon. Friend is raising an important point, apart from dealing with something that is of considerable constituency concern. If it makes sense for the Government to invest in research into supersonic flight, for example, it is equally good sense for the Government to support research into subsonic areas, such as laminar flow wings.
and new structures and developments which have an immense return but which perhaps would be too expensive for a private enterprise firm in terms of finance.

Mr. Colvin: My hon. Friend has a point. I have a constituency interest, as the House will understand, in a second generation Concorde, and I believe that any Government have to get the priorities right when considering any form of Government investment. As so much work has already been done on Concorde and the further studies, I feel that it would merit further investment in that project, but I do not think that the Government are in a position, because of the diabolical state of the economy when they took over from the Labour Government, to make any appreciable investment in research and development in the aerospace industry. If any pennies are available, further studies on Concorde would certainly merit an investment, and in due course would pay a handsome dividend.
There is no doubt that in the future there will be no competitor for Concorde from anywhere else. The Mark I Concorde, which now flies, was effectively barred from being an economic success by the activities of the aviation and aerospace industries and the political goings-on in the United States of America. That aeroplane would have been a commercial success had it been allowed to fly on the routes for which it was designed—from London to New York—at a much earlier stage in its career. I am afraid that it was handicapped from the start by the activities of the Americans, who saw in Concorde an aeroplane which could really take the pants off them. They were frightened of that competition and did everything in their power legally to stop it flying those routes for which it was designed.
I take the point that my hon. Friend has made. There is a place for the Government's injecting, occasionally perhaps, funds into new technology, pump priming, as it were, as they have shown in the way that they have invested £25 million in the Inmos silicon chip concern, which is again a Bristol investment. I look forward to the day when the Government decide that perhaps the second tranche of money should go into Inmos, which has

proved to be a profitable and adventurous industrial undertaking.
All in all, the future of the British aerospace industry looks bright, but there is a major cloud on the horizon. British Aerospace is already short of the design staff required for the future programme. Lack of mobility within the company is not the only reason. Punitive rates of income tax under the previous Government and the erosion of differentials resulting from pay policies under various Governments have ruined morale, promotion prospects and recruiting.
The Government's tax cuts and moves towards restoring differentials must be welcome to the engineers, who are the lifeblood of the aerospace industry. In some cases their starting salaries are little better than those of the cleaners and sweepers in the same factory. It is high time that we started paying our engineers what they are worth and rewarding them with a status commensurate with their contribution to the economy. Their status should be comparable to that enjoyed by engineers on the Continent and in the United States. If we do not do that the brain drain will continue and increase. Our aerospace industry is a vital part of the country's economy and we should not let it waste away.
With that gloomy parting warning, I wholeheartedly commend the Bill to the House.

Mr. Arthur Palmer: I am sure that the hon. Member for Bristol, North-West (Mr. Colvin) will not misunderstand me, because it is no fault of his, if I say that he has represented a Bristol constituency for only a short period. He must therefore not take unto himself the right to speak for employees at Filton and in the Bristol Aerospace establishments. Those of us in the Labour Party who have represented Bristol constituencies for a long time have also been to Filton on many, many occasions and talked to the skilled and unskilled workers and technical staff, and I like others, am connected with a union that represents the technical staff in the aircraft industry and elsewhere.
I was unfortunately obliged to be out of the Chamber for a short while but listened to the speeches until about an


hour ago. Before I left, the hon. Member for Hertford and Stevenage (Mr. Wells) made a speech of quantity rather than of quality, and made one extraordinary point that I did not understand. The nationalisation statute gave the employees certain rights, in common with those in other nationalised industries to negotiate over wages, salaries and conditions, and to joint consultation on matters of common concern. That is no different perhaps from the practice of the best private enterprise companies, but the hon. Gentleman seemed to think that it should not be so. Was he arguing that, if the transfer goes through—and it can do so because the Government have a majority—the new aerospace company will not practise joint consultation with employees and there will no longer be negotiations over wages, salaries and conditions? The hon. Member will be able to read my words in Hansard. Was he suggesting that the new company, half State-owned, will take certain rights from the trade unions?

Mr. Wilkinson: I believe that I understood the point that my hon. Friend the Member for Hertford and Stevenage (Mr. Wells) was making. He said that the Aircraft and Shipbuilding Industries Act laid upon the board of British Aerospace a duty to consult relevant trade unions, but not others in the work force who were not trade unionists or members of staff associations. That was the burden of his complaint, and it was that element of discrimination that he was glad would be removed when the new Bill became law.

Mr. Palmer: I do not think that the hon. Member for Ruislip-Northwood (Mr. Wilkinson) understands the nationalisation statute. He used the words "relevant trade unions". If a trade union organises a substantial group of employees, whether staff or so-called work force, the corporation is under a statutory obligation to consult that trade union. It is perfectly true that there have been rivalries, differences and jealousies, but that does not remove the obligation from the corporation to consult every section of the employees through the relevant trade unions. If it is suggested that, as a result of the Bill, that will not be done in future, it is of some consequence and I should like to have the Minister's reassurance.
I do not propose to go into the detail of the Bill here. As the Government have the majority, I assume that the Bill will go to Committee, and we shall then be able to look carefully at every line of the measure. As my right hon. Friend the Member for Deptford (Mr. Silkin) said, there are many contradictions and examples of loose thinking in the Bill which will need to be cleared up in Committee.
Many of my hon. Friends have asked why the Bill is necessary. That is the real issue before the House. The only consistent reason given by the Secretary of State on 23 July was that the change was proposed in the Conservative election manifesto. Since then, today and at other times, he has gone into greater detail.
I have had several lives in the House. Curiously enough from some points of view, I represented Wimbledon from 1945 to 1950, and I can remember many of the debates of that time. Whole columns of Hansard contain speeches by Conservative Members stating that there was no such thing in British constitutional practice as the doctrine of mandate. If, when a party came to office, good sense showed that a suggested measure was no longer possible or wise and there were no valid reasons for it, the Government did not necessarily have to carry out that measure just because it was in the parliamentary programme. That view may not necessarily receive support from some quarters on the Opposition side of the House, but at one time the Conservative Party theoreticians argued strongly that there was no such thing as a doctrine of mandate.
What a change there is now from the Conservative Party of the immediate postwar period. Those empirical days are long since past. The present Government and the Secretary of State for Industry are far more committed than any previous Conservative Government—and that is the danger—to doctrine and the theoretical conception of perfect economic order, which has never existed and never will. They must be acting for reasons of doctrine or mandate because not other satisfactory reason can justify the Bill.
British Aerospace came into existence barely two years ago with the help of £27 million of public dividend capital and £17 million from other Government


sources. The rest of the capital was with the companies that were taken over under the Act. The total assets employed on 31 December 1977 were £285 million. A year later, since nationalisation, their value was £322 million. I do not argue that that is all due to nationalisation. However, I would argue that the nationalisation of the industry has done nothing to prevent its progress, as is being argued by the Conservative Members.
In 1978, the profit after tax was nearly £29 million. That is not such a bad return on the assets. If the industry were left to get on with the job under the Act as it now stands it could well achieve the 21 per cent. return which the Ministers have recently imposed. That could be done just as well under the present organisation as under any new organisation I am sure.
The worst thing for the morale of employees in an industry—indeed in industries before and sometimes after nationalisation—is a constant atmosphere of change of organisation. The aerospace industry cannot be compared to the railways where we have to contend with changing times and modes of transport, or, in the private sector, with textiles, where the industry is struggling against declining fortunes. Aerospace is a high technology, advanced industry. Hence I cannot understand why Ministers suggest to the House that, less than two years since the previous Act, there should be another overturn—unless as I say it is for reasons of doctrine or mandate.
It was suggested that clause 4 in the Labour Party constitution compelled the Labour Party to undertake policies irrespective of their merit. I do not believe that for one moment, Of course I accept clause 4 as an ultimate ideal. It is not a bad thing for parties to have ideals and ultimate principles. There is more sense in the Labour Party believing in a Socialist future than the Conservative Party believing in a capitalist past.
But the people of this country have to deal with the present—this decade, and the decade afterwards. Argument about the ultimate ideal of a Socialist society is not relevant to what has to be done today any more than is a theoretical conception of a glorious capitalist past. We must face the facts as they are and deal with them on their merits as best we can.

Mr. Onslow: Will the hon. Gentleman remind me why these industries were nationalised by the previous Government?

Mr. Palmer: The outstanding reason was to carry through a rationalisation of the industry by amalgamation within the industry. That was why the Plowden committee was appointed but the industry seemed incapable of arranging amalgamation on its own. Without putting myself out of order, I should like to refer to an industry of which I have considerable experience—electricity supply. Before nationalisation there were 600 electricity supply undertakings in the country on paper. They had been boiled down in practice to about 250. For years there was talk about further rationalising the industry. It was done in the end in the only way possible—nationalisation under a public corporation.

Mr. Onslow: I am interested to hear that being offered as the prime reason. However, that purpose having been achieved—and there is no intention of disturbing it in this Act—wherein lies the hon. Gentleman's objection to returning the industry to private hands in the form which is suggested?

Mr. Palmer: I shall try to answer the hon. Gentleman's point in a moment, as I get on.
During our debates on the Second Reading of the nationalisation Bill and in Committee later it was conceded by opponents of nationalisation that the country could no longer afford the luxury of too much domestic competition. True competition today is international rather than domestic. Therefore, it was important for amalgamation to go through. It was necessary to form a single formidable British enterprise and, irrespective of party, we should be proud that British Aerospace entered 1979 with a £3 billion order book.
Lord Beswick, the chairman of British Aerospace, defined objectives of the enterprise as follows:
To fulfil our commitments to our customers.
To help Britain earn her collective living.
To provide secure and satisfying employment for all our workforce.
That is inscribed on the banner of the industry and it is a change from the sad


and doleful comments that we hear continuously from the CBI and the Institute of Directors. Those two organisations tell us that there is no opportunity, in spite of the change wanted by them, of British industry livening itself up because world conditions are too difficult.
The aerospace industry is prosperous and hence I see no financial reason for making a change. Does the management of British Aerospace want a change? It does not. Of course, it is decently neutral about the matter because it will have to live under new masters. That is to be expected. My hon. Friend the Member for East Kilbride (Dr. Miller) quoted from the document issued by the board of British Aerospace which said that it would have preferred to continue:
without the uncertainty and distraction of changes effected by Parliament.
That is understandable. In the long run, the management and workers work for the industry, whoever happens to own it. That is the true continuity.
Like myself, many of my hon. Friends have close connections with the trade union movement. They will know that the movement is opposed to any change of this sort. Conservative Members often believe that they know the way into the minds and thoughts of employees independent of the trade unions. The trade union movement supported the nationalisation of the industry and it is opposed to its denationalisation. I do not think that the change will assist good labour relations, particularly if some of the speeches that have been made by Conservative Members are taken seriously by employees in the industry.
I have visited Filton many times. The hon. Member for Bristol, North-West goes there these days. The thing that worries employees at Filton is uncertainty about the future of the Filton works. There was a time of great uncertainty when the Concorde work was running out. There is now a pretty full order book which is well spread over the weapons and civil sectors. Some of us have had to try very hard to reassure those employees that Filton would not be made second best to other centres of the aerospace industry. I am quite certain that, within a short time, I shall have representations from the unions expressing worry about what the future of Filton will

be under this new management. No doubt the unions will also communicate with the hon. Member for Bristol, North-West.

Mr. Colvin: In my talks with trade union representatives—by that, I mean the officers concerned in the unions—it seems that most of them were concerned about the risk of a carve-up of British Aerospace. I think that we have satisfactorily answered that fear with the proposals that are now before us. There will be no carve-up. Therefore, I believe that that removes the main objection of the trade union officers. Is the hon. Gentleman conscious of any ballot of the work force within British Aerospace aimed at discovering whether the ordinary rank-and-file member is in favour or against denationalisation in the way that is proposed?

Mr. Palmer: I know that such ballots are in fashion at the moment. There has been one at British Leyland that has attracted some attention. However, my experience is based on the normal, organised expression of views of the work people—by that I mean all grades—through the trade unions and other bodies that they have set up to represent them. I am merely saying that the work force is concerned about upset and disturbance that may interfere with job prospects. The hon. Gentleman said that their fears had now been removed. But who created those fears? It was the Conservative Party, by some of its earlier statements about returning profitable parts of the industry to private enterprise. It is no good the hon. Gentleman saying that there is no need for fear, because that fear should not have been created in the first place. The hon. Gentleman may have converted himself, but he has not necessarily converted the rest of us or the employees at Filton.
My conclusion like my beginning, is that the Bill is unnecessary. The Conservative Government have already done enough harm to the British economy by their doctrinaire financial policy—we can see evidence of that on all sides—without adding this piece of doctrinaire industrial policy to their overall folly. No parliamentary democracy can be successful in a difficult and threatening world by assuming that no middle ground is left between a centrally directed, collectivist economy and one inspired by the doctrines of Milton Friedman or Professor


Hayek. There is a tremendous middle ground which is generally described in this country as the "mixed economy". Therefore, we must accept the concept of "the enterprise"—

Mr. Colvin: rose—

Mr. Palmer: Perhaps the hon. Gentleman will wait a moment. He is very impatient, but I am glad that I am interesting him. We must accept the concept of "the enterprise", whether nationally owned, privately owned or of mixed ownership.

Mr. Colvin: Surely, both in the case of British Airways which we discussed last night, and British Aerospace, we finish up with mixed economy companies, half owned by the State and half owned by free enterprise. That is precisely what the hon. Gentleman has been advocating.

Mr. Palmer: When I refer to the mixed economy—and I think that most people would agree—I mean an economy consisting of a considerable public sector, directly or indirectly owned by the State, a considerable private sector, and an area in between. I am saying that the aerospace industry has been fitted into one part of that mixed economy by the act of nationalisation and there is no good practical reason why a change should be made. The only reasons that have been given that can be taken seriously are that the Conservative Party feels that it must do this because it was in its mandate, and that it fits in with some of the theoretical economic concepts of the new Tory Party.
I turn to two final points relating to the appointment of directors. I did not follow the Secretary of State very well. He said that the Government would take no hand in the appointment of directors, even though they might have a majority shareholding. It was said that there would be two part-time directors, but with regard to directors generally the major shareholder would have no say. How exactly then are the names to be obtained? Is it seriously suggested that there will not be behind-the-scenes discussions between representatives of the groups of shareholders to find suitable people to sit on the board? I should have thought that that was quite obvious. Surely this will not be left to the chance

of nomination at a shareholders' meeting. I cannot believe that.
The Secretary of State seemed confused on this point. I believe that is because he allows doctrine always to overwhelm his normal, rational thinking process. That is his personal difficulty. We should like to know how the names are to be obtained. I cannot believe that any British Government, much concerned with defence and the prosperity of the country, in circumstances where they have a majority or near majority shareholding, will not have some say in the appointment of directors.
Conservative Members seemed to argue that in the nationalised industries the chairmen and members of the boards were the creatures of Ministers. That is new to me. I should have thought that it was well known that the chairmen of the nationalised industries often take a very independent line. In fact, I once heard a Conservative Minister say that he found that the directors of private companies were more likely to listen to Government wishes than the chairmen of nationalised industries, because the chairmen of the nationalised industries could rely on their statute to buttress their independence.
To argue that by making this change we shall somehow give greater freedom of decision to those who have to run the industry is, I believe, a wrong and shallow assumption. This industry cannot be successfully run, however it is owned, unless there is freedom of decision on the part of those who have to do the job from day to day. My argument against the Bill is that it is unnecessary at this stage in the development of the economy. If the Government had any sense at all, they would leave well alone.

Mr. John Wilkinson: At long last we have had a contribution from the Labour Benches that at least recognised the importance of stability in the industry. It also recognised that the future organisation of the industry should be as settled as possible from the point of view of the employees who work in it. The speech of the hon. Member for Bristol, North-East (Mr. Palmer) was just the sort of contribution that I would have expected from him. A number of years ago we worked together


on the late lamented Select Committee on Science and Technology. I regret the passing of that Committee which was useful for the workings of the House.
The industry whose future we are discussing tonight is no ordinary industry. Since the Second World War it has produced such leaders as Sir George Edwards and Sir Arnold Hall, and designers as outstanding as the late Sir Barnes Wallis and Sir Sidney Camm. They were men of excellence and genius, unsurpassed in British achievement. Within the work force, that quality has been reflected at all levels. There has been, and still is, a devotion to the industry and its work and there is a creativity and pride in aerospace that are almost second to none.
In a different and poignant way it is an industry apart. I think, for example, of Russ Pengelly, who was killed a few months ago testing a Tornado. John Derry was killed displaying a Sea Vixen at Farnborough and Mike Lithgow was killed test-flying the BAC111. It is an industry which places special demands on those who work in it.
I am the only participant among Conservative hon. Members who speaks as someone who has worked in the industry. The previous speakers, who have made an important contribution to the debate, have been constituency representatives. I worked on the Jaguar project before the 1970 general election, and in 1975 I returned to my old firm, the British Aircraft Corporation, to work for the chairman, Mr. Allen Greenwood. I recall our preoccupation, not just with the job in hand, but with the Shipbuilding and Aircraft Industries Bill and its effect on the organisation and ownership of the industry.
The hon. Member for Westhoughton (Mr. Stott) reminded us that the Standing Committee on that Bill ran to no fewer than 58 sittings. I sat in as a link person between the industry and the Committee. I stayed in my employment for a short period under the British Aerospace regime.
Without being too subjective, I will tell the House what life was like under nationalisation. I had worked as personal assistant to the chairman of BAC—a similar position to that which was occupied by Frank Beswick under Sir George

Edwards. As soon as nationalisation was in the offing, decisions and attitudes were evidently becoming more politicised. People were wondering how their behaviour, policies or views would affect their political mentors, and whether that might improve their chances of promotion. Those became important preoccupations.
What happened when vesting took place and the nationalised corporation was established—the corporation that we were told would enhance industrial democracy and participation? The car parks were laid out anew—new special places for the new bosses. The office occupied by my boss and Sir George Edwards before him was not good enough for the new chairman. He had to have somewhere a floor higher. Partitions were pulled down, thicker carpets were laid and all the paraphernalia of bureaucratic power installed—not the sort of measures that enhance industrial performances in any way, but the sort of measures that I, as a middle management type, noticed and resented.
I earnestly believe that the proposed measure will take aerospace once and for all out of party politics. It is a special industry, and I give examples of ways in which it is different from most other industries. The scale of investment is much vaster, and the time scale within which a return is to be seen on that investment is substantially longer. There is a technical complexity and a variety of disciplines that have to be embodied together to produce an end product which will have to meet demands and requirements stricter than in any other engineering industry, with the management of the variety of disciplines, skills and talents to bring that process about.
Because the cost is so great, and because a single nation no longer has the power and resources to do many of the more advanced projects, there is an international dimension. What an amazing and wonderful thing that is. For example, there is the European Airbus which has participating companies from Spain, Holland, Germany, France, United Kingdom and Sweden and can compete successfully in the world market with all its parts brought together from all over Europe. That is no mean feat of management.
There is the aspect of national power, prestige and national security which both civil and military aviation encompass. There is the most fateful area of all, that of decision making and the consequences of error in the decision-making powers. In 1971 a decision on one project, the RB211, led to the demise of Rolls-Royce. In Germany more recently there was the failure of the VFW-Fokker 614 project. From that failure we saw Fokker and VFW move apart. That was a significant event.

Mr. Palmer: The hon. Gentleman referred to a mistaken decision made concerning Rolls-Royce. That decision was made when Rolls-Royce was under private enterprise, and that is why it had to be rescued.

Mr. Wilkinson: I do not dispute that one iota. I am saying that the industry is one in which the consequence of error in decision making are horrendous. They are horrendous if the company is nationalised just as much as if it is in private hands. Aerospatiale, a nationalised France concern, is certainly not profitable, but Avions Marcel Dassault, a private company, is a highly commercial enterprise orientated towards the market, providing fighter aircraft that are second to none, and doing extremely well for its shareholders. Aerospatiale, with a whole range of activities and nationalised, is not in any financial sense doing so well. I accept the hon. Gentleman's point; and I am not trying to make any partisan argument.
I believe that the Bill, keeping together as it does the company in its present structure, should provide stability and should eliminate the shuttlecock effect of the partisan divide in aerospace.
The right hon. Member for Deptford (Mr. Silkin) made a highly interesting and original speech. Possibly we can excuse the eccentricity of some of his remarks, because he has not long taken an interest in industrial matters. He advanced four arguments showing why nationalisation was necessary for aerospace. First, he said that it was necessary to bring about a merger of competing groups. As my hon. Friend the Member for Woking (Mr. Onslow) said in an earlier intervention, there has been a steady process of rationalisation within the industry on

purely commercial grounds. BAC is an amalgam of Bristol, English Electric, Vickers and, in the early days, Rolls-Royce. Hawker Siddeley Aviation was De Havilland, Hawker and Armstrong Whitworth. The process of rationalisation was already in train. Westland was an amalgam of Saunders Roe, Fairey Helicopters and Westland Helicopters. MBB is an amalgam of Messerschmitt, Bolkow and Hamburger Flugzeugbau. The process has taken place worldwide without nationalisation.
It is highly debatable whether eliminating the competing groups of Hawker Siddeley Aviation and BAC has been a step forward. Indeed, I think that it is highly questionable. I am able to say from experience that it is a more impersonal and unwieldy organisation. It is amusing to use as an example the Miss British Aerospace competition, in which appear Miss Hawker and Miss BAC. Those are the sashes that the girls wear even after nationalisation. Obviously old loyalties die hard!
Secondly, the right hon. Gentleman said that private firms could not finance high technology such as aircraft. No one has denied that. When the Bill is enacted there will be launching aid. That is sensible, reasonable, logical and right.
Thirdly, the right hon. Gentleman said that defence interests involving aerospace necessitated nationalisation. Many contractors worldwide undertake vital defence functions without having to be nationalised. I have already mentioned Avions Marcel Dassault, which is a supreme example.
Fourthly, the right hon. Gentleman said that nationalisation provided a more flexible arrangement. "Flexible" is a euphemism if ever I have heard one. The right hon. Gentleman cited the example of the HS146. I shall not comment on the merits or demerits of certain projects. However, since the HS146 has gone ahead, much less emphasis has been placed within British Aerospace on the BAC111. The BAC111 is still selling worldwide. Over 220 BAC111s have been sold worldwide. The Romanians have recently entered into a licence-to-build agreement with British Aerospace for the 111. However, over 100 persons in the 111 team have lost their jobs. We must take much of what the right hon. Gentleman says with a pinch of salt.
Although in my heart of hearts I wish the Government to assume a greater private shareholding than 50 per cent., I recognise that there is merit in providing a structure that will not be provocative and lead to renationalisation by a Labour Government.
We have also to consider foreign participation. There are already transnational groupings in Aerospace such as Panavia for the Tornado and Sepecat that produces the Jaguar. The groupings are rather ad hoc and are orientated towards single projects. Airbus Industrie, however, is producing a family of aeroplanes. It may be that by the end of the century we shall want to evolve a genuine transnational corporate structure. That is by no means impossible. I hope that the provision whereby 15 per cent. investment in the equity capital cannot be exceeded on the part of foreign holders will not make that an impossibility.
I welcome the fact that Her Majesty's Government have shown confidence in the existing board management of BAe. As I have said, it is a highly specialised and complex industry. It is the sort of industry that requires a lifetime's devotion if one is to assume a position of leadership in it and have any reasonable chance of success. I hope that that will continue to be borne in mind. I hope that my right hon. Friend and the Government will consider seriously the possibility of appointing non-executive directors—not necessarily financiers—with relevant experience in other aspects of engineering or high technology industries.
Many of our competitor nations are placing great emphasis on aerospace. For example, the Germans are hell-bent on building up a major aerospace capability, as are the Japanese. When the Government are able to devote more funds to aerospace when the economy is stronger, I hope that they will not hesitate to do so. I am sure that the successor company will be a good mechanism for putting Government funding in aerospace to good effect.

7.45 p.m.

Mr. Stan Thorne: I cannot take up the remarks of the hon. Member for Ruislip-Northwood (Mr. Wilkinson) in terms of the level of his involvement in the British aerospace industry. I worked in aerospace for some

years, but on the shop floor rather than among the upper echelons of the industry.
I have been interested by a variety of views that have been expressed, and I begin by referring to the speech of the Secretary of State. Among other things, the right hon. Gentleman referred to the Bill becoming law and the company becoming a Companies Act company. He said that that would be beneficial to those who owned it and to those who worked in it. To what extent was research undertaken by the right hon. Gentleman and his Department to enable him to make such a statement? British Aerospace workers in the Preston area have not been consulted by the Department of Industry on the likely benefits that could accrue from British Aerospace being returned to private ownership.
In the Preston area the 12,000 to 14,000 aerospace workers are involved in military aircraft production. The Secretary of State referred to satisfactory profits for those who buy shares in the industry. Clearly he means private profits. It strikes me as extraordinary that yet again we are talking about private profits from defence and military equipment. I believe that there is something immoral about private profits being made from the production of armaments in whatever form. It has been said that wars are terrible, but they are terribly profitable. I view with considerable regret the right hon. Gentleman's comments about profits.
It was against the background of profits that the Secretary of State spoke about fierce international competition. He implied that that competition might best be met following the passage of the Bill because an element of private ownership would be involved. However, the evidence of the past few years leads us to exactly the opposite conclusion. Private enterprise companies of international repute have had to call for Government aid, and millions of pounds of public money have been poured into private businesses to enable them to compete internationally.
The right hon. Gentleman has already made it clear that there will not be funds available for this type of aerospace industry because of reductions in public expenditure. He assures us that that decision is not doctrinaire. Of course, it


is only Labour Members, who advocate public ownership, who are doctrinaire. It is not doctrinaire, apparently, to pursue private enterprise willy-nilly, irrespective of the circumstances. That—and I understand the point—is the natural position of the Conservative Party.
Reference was made to control being possible only if a majority of shares was held by the Government. That is absolutely right. The Government will not have control. They will not take powers to intervene. In effect, whether the private shareholders own 49 per cent. or 51 per cent. of it, aerospace will be in private hands. In my view, it is a doctrinaire measure.
There must be some interpretation, even by the Secretary of State, of the meaning of the word "private". If we sell half, or about half, the total shares, and do not interfere, and take no powers, it seems to me that to all intents and purposes British Aerospace will be in private hands. As was indicated in response to a question, there will be little or no prospect of gaining Government aid for launching projects.
How does that square, I wonder, with the earlier claim that the measure was to be beneficial to those working in the industry? I should have thought that the prospects of aircraft designers, engineering technicians and senior men in the toolroom in the aerospace industry, given this new measure, would be somewhat less than the security many of them feel they now have in working for a British publicly-owned industry. I question very much—frankly, I reject—the notion that the workers will benefit from this measure. Certainly in one field they will quite clearly not benefit.
Like my hon. Friend the Member for Westhoughton (Mr. Stott) and other right hon. and hon. Members, I sat for 58 sittings on the Aircraft and Shipbuilding Industries Bill. We argued long into the day in Committee and across the Floor of the House about industrial democracy. It is true that various hon. Members on both sides of the Committee had different notions of what industrial democracy meant. One thing is quite clear. This Bill will be a major setback to any growth of industrial democracy within British Aerospace. Private companies are

not in business to promote industrial democracy. They are in a situation in which they purchase labour, if they possibly can, at the lowest price level necessary to ensure its continuity. They are not involved in giving the labour force the responsibility for production planning. For most private shareholders, who employ directors and managers to protect their interests, the worker's job is to carry out a set of orders given through various levels of supervision. To the shareholders that is holy writ. Most managers strongly protect their right to manage—which, for them, is beyond question.
The need to promote industrial democracy will fall in a situation where private shareholders are taking decisions in a British Aerospace company, particularly if we accept the view of the Secretary of State, who presented the Bill, that satisfactory profits are to be earned. Most of us are aware of the fact that to earn satisfactory profits in a situation of intense competition, directors and managers, to satisfy shareholders, must exercise a firm control over the work force in an attempt to gain the best return possible at the cheapest price. I say at the cheapest price—

Mr. Robert Atkins: rose—

Mr. Thorne: I shall not give way. I did not interrupt you when you were speaking.

Mr. Deputy Speaker: Order.

Mr. Thorne: I apologise to you, Mr. Deputy Speaker, as you have not yet spoken.
I return to the point that I was making: the best return for the cheapest price. Directors, managers and shareholders are forced to obtain that. I do not say that they are necessarily actuated by gross immorality. They are forced to do that to survive in a competitive situation. The cheapest way is obviously to lower the costs. The major part of costs is, of course, wages. To satisfy the thirst of private shareholders, a British aerospace company will inevitably force down costs—in other words it will attack wages and create a much less favourable climate of industrial relations than exists at present. No matter what Government supporters say about a publicly-owned aerospace industry, it is true, as will be confirmed


by my hon. Friend the Member for Nuneaton (Mr. Huckfield) who is the Opposition Front Bench speaker, that industrial relations since the passing of the aircraft and shipbuilding industries legislation have been extremely good in the aerospace industry.

Mr. Les Huckfield: indicated assent.

Mr. Thorne: It is fundamental to Tory ideology, which has given birth to a not surprising Bill, that, given the power, the Government would give this industry back to private shareholders. However, their notions about control, which stem from Conservative ideology, I find somewhat puzzling.
Previous speakers alluded to directors. The hon. Member for Ruislip-Northwood was closely associated with a director whom I regret was ever appointed to the board of British Aerospace. Prior to the British aerospace industry becoming publicly-owned, he made a firm resolve that nationalisation would take place over his dead body, although the words he used were a little different from those. He made it absolutely plain that he opposed public ownership for the aircraft industry.

Mr. Wilkinson: The hon. Gentleman referred to someone with whom I have worked extremely closely. Mr. Allen Greenwood expressed his view about what he thought the Bill would do to the industry. He gave his judgment in public. I think that that was the right and proper thing to do. After Parliament decided to vest BAC and HSA into British Aerospace, a statutory corporation, he served—and serves—loyally and well as deputy chairman of British Aerospace. He was largely instrumental in securing the Romanian deal on the BAC 111 aircraft.

Mr. Thorne: I am sure the hon. Gentleman recognises that I was not in any way suggesting that the gentleman to whom I referred made a statement that he should not have made. I am merely indicating that, he having declared his opposition to public ownership, in my opinion it was a mistake for the previous Government to appoint him to the British Aerospace board. The hon. Member for Ruislip-Northwood indicated that in spite of that he did a satisfactory job as a member of the board. I am not attempting

in any way to question that observation.
I am interested, particularly in view of the comments of the hon. Member for Preston, North (Mr. Atkins), in reactions to the Bill from outside so far as we are able to interpret them. The joint staff unions at British Aerospace, Preston and district, have made it absolutely clear to me that they oppose the Bill. They see no gains in it and they are highly apprehensive about the changes proposed. It is also clear, as a result of meetings I have recently attended, that the shop floor unions there are also completely opposed to the passage of this Bill.
The hon. Member for Preston, North, whom hon. Members will recognise as a poor substitute for the previous Member for that constituency, has claimed to speak with considerable authority on the subject of British Aerospace. He welcomes the Bill. I am glad that he has made his position clear because British Aerospace workers in Preston ought to be informed about how hon. Members view these questions. They were certainly aware of the facts in February 1974, in October 1974 and in May 1979 that I strongly supported the public ownership of the aircraft industry, and indeed of many other industries.
In his speech, the hon. Member for Preston, North referred to an ideological hang-up. Apparently this is the other side of the stamp referred to in other speeches as the doctrinaire views held by Labour Members. To indicate his own doctrinaire position, the hon. Member referred to a petition signed by 2,000 people employed at British Aerospace. He did not mention that that number was a minority of the work force employed at BAC. Of the 14,000 work force, 2,000 workers represent something like 14 per cent. In other words, 86 per cent. of the work force did not sign the petition opposing the public ownership of the aerospace industry. I wonder what are the views today of those who signed that petition.
I challenge the hon. Member for Preston, North to a public debate in Preston on the subject of the ownership of British Aerospace, before an audience of British Aerospace workers. We could then ascertain precisely who represents what views in this House. The hon. Member will have the opportunity at such a


public debate of defending his claim that he will buy shares in British Aerospace and I shall have the opportunity to argue why I shall not be buying shares.
The hon. Member claims to speak on behalf of the constituency of Preston. I take a particularly dim view of that claim because it is impossible for any hon. Member to do that. I would certainly never claim to speak on behalf of the constituency of Preston. There happen to be two constituencies, anyway. How can any hon. Member know that he speaks on behalf of his constituency? I should be interested to know when the hon. Member last talked with the blue and white collar organised workers at British Aerospace. He did not tell us that.

Mr. Robert Atkins: On Saturday.

Mr. Thorne: When the hon. Member says "on Saturday", he forgets to tell us that he spoke to about 10 people then. I am talking about 14,000 workers in the preston district. Most hon. Members hear only a limited number of voices. The voices that I hear say "No" to the Bill and that is how I shall vote tonight. The hon. Member for Preston, North revealed that he is a member of ASTMS. He obviously knows that I am a sponsored member of that union.
I invite the hon. Gentleman to consider the views of members of that union, which he, with his ideological position, obviously believes to be irrelevant. If he seeks to claim his membership of ASTMS with, presumably, some honour, he should take the trouble to find out what the members of that organisation feel about the Bill. I can give him that information free, gratis and for nothing. They are opposed to the Bill.
I should like to refer briefly to the hon. Member for Bristol, North-West (Mr. Colvin). He is another poor substitute for the previous hon. Member for that constituency who put up a highly active participatory fight in the House on behalf of workers in British Aerospace. He, too, served for 58 sittings on the Aircraft and Shipbuilding Industries Bill. I very much regret the loss of an hon. Member who showed such tenacity in the face of considerable opposition, and in the face of some of the most objectionable people who were involved with that particular measure.

Mr. Colvin: rose—

Mr. Thorne: I shall not give way. I have not finished dealing with the matter. The hon. Gentleman may wish to intervene in a moment. He made references to public ownership, the last election, the late Mr. Hugh Gaitskell and clause four of the Labour Party constitution. I have no recollection that the last election was fought by the Labour Party on clause four. I ask the hon. Gentleman, since he wishes to intervene—and I shall give him that opportunity—to tell me which industry the Labour Party sought to take into public ownership.

Mr. Colvin: Mr. Deputy Speaker, thought that I was following the normal courtesies of the House in addressing my remarks to you, rather than to the hon. Member for Preston, South (Mr. Thorne). But he raised the matter of clause four and my insinuation that the Labour Party had it hanging round its neck like a millstone and that because of that it was deprived of victory at the last general election. It was there, but it was under the carpet, because the Labour Party published a pamphlet in 1976 which was described as "Labour's Programme for Britain 1976".

Mr. Deputy Speaker: Order. The hon. Gentleman has already made one speech. I thought that he was making an intervention.

Mr. Thorne: It is typical that the hon. Gentleman did not intend to answer the question I asked, but merely went on to his favourite tack. In doing so he has, in fact, answered my question. He knows, as I do, that in the Labour Party manifesto of 1979 the Labour Party proposed no single industry for public ownership. Unlike him, I view that with considerable regret. The last Labour Party manifesto did not contain the false promises about the economy that were contained in the manifesto on which the hon. Member for Bristol, North-West fought his election.

Mr. Wilkinson: On a point of order, Mr. Deputy Speaker. We are surely digressing very far on Second Reading. The hon. Gentleman has been on his feet for 25 minutes. We are now going into past history that has nothing to do with aerospace or anything that is before the House.

Mr. Deputy Speaker: Mr. Thorne.

Mr. Thorne: Thank you, Mr. Deputy Speaker. From the fact that you have called me again, I conclude that I was not out of order. People have yet again to suffer deprivations inflicted on them by the Tory Government to learn that the solution to our problems is not less Government planning, less State intervention in industry and less economic planning, but more Government planning, more economic planning and more attempts by Government to meet people's needs on the basis of utilising our resources through public ownership in the best interests of the people as a whole.

Mr. Cranky Onslow: I may return to the remarks of the hon. Member for Preston, South (Mr. Thorne), but, as he made such a boring speech, I may not remember much of it in a few minutes' time. I shall, however, comment briefly now on his peroration, which seemed as classic an example of dogma gone raving mad as we have heard in the House for some time. The hon. Gentleman no doubt believes it, but most of us know that if he hears voices and listens to that rubbish he is likely to be out of the House and we shall have a double victory to celebrate in Preston. I look forward to that day.
The right hon. Member for Deptford (Mr. Silkin), who opened the debate for the Opposition, made a revealing speech—revealing, mainly, of his own ignorance of the subject. I am sorry he is not here to hear me say so, because I should be happy to state my remarks to his face. The right hon. Gentleman showed little knowledge of, research into, and awareness of the subject matter of British Aerospace. If he is intending to hold on to that post and not aspire to something higher, I hope that he will do his homework. The industry will not thank him if he talks in a plausible way but talks nonsense.

Mr. Sheerman: Let us hear what the hon. Gentleman has to say.

Mr. Onslow: I shall be happy to oblige the hon. Gentleman, but I have not wholly finished with his right hon. Friend.
The right hon. Gentleman's distinction between what he called business and what he called industry was extremely interesting

as an insight into his mind. He failed totally to realise that both these activities, if they are separate, which I would not accept, have in common one essential ingredient for success—good management.
In politics, success depends on good leadership. The human element was totally ignored by the right hon. Gentleman. The idea that industry was a purely mechanistic process and that business was simply oriented to profit, with no link between the two, showed a depth of ignorance that was surprising until we heard what the right hon. Gentleman had to say about whether industries which were major suppliers of the nation's defence needs should be nationalised. That is another subject on which he appears to have done little forward thinking.
When challenged, the right hon. Gentleman was evasive and did not seem to realise that, by his own definition, which he offered in all seriousness, Westland Helicopters Ltd, should undoubtedly be a prime candidate for nationalisation, as should the Martin Baker company, which makes aircraft ejector seats, for which there is not much civilian demand. That would also be news, I dare say, to the right hon. Gentleman.
The right hon. Gentleman seemed to be fully at home only in striking a happy vein of fancy about the formation of ingenious companies that would be able to conceal potential foreign bidders for shares in British Aerospace. He talked about "KGB Ltd.". I dare say that he has not been involved in the formation of any such company. It recalled to my mind a long succession of similar enterprises: OGPU Ltd., GRU Ltd., SMERSH Ltd, and KGB Ltd. It may be that in the archives—

Mr. Les Huckfield: What the hon. Gentleman is saying is most interesting. He clearly realises that the Government Benches are very short of speakers tonight. My right hon. Friend the Member for Deptford (Mr. Silkin) would be touched to hear so many references to what he said, but the House might like to hear a tiny bit of what the hon. Gentleman himself thinks—just a tiny bit.

Mr. Onslow: Just a tiny bit to oblige the hon. Gentleman, who spent most of


the afternoon whispering urgently into his right hon. Friend's ear in an attempt to prevent him from making more and more crass mistakes. The hon. Gentleman is able to devote his attention to me now only because his right hon. Friend is not in the Chamber. He will have a chance later. If he wants me to devote a tiny bit of attention to him, I may do so presently, but I want to talk about some other matters first.
I want in particular to tell the hon. Gentleman, lurking behind that growth on his face, that no Labour Member has so far produced one good reason for opposition to the Bill. The hon. Member who came nearest to it was the hon. Member for Bristol, North-East (Mr. Palmer), who said—and it was a fair point—that there was a need to rationalise the industry, and that it was possible to do that only by nationalisation. It certainly was done in that way, and so in a sense the hon. Gentleman's point has proved itself by default. But, the rationalisation having been achieved, and there being no intention now to disturb it, the justification for retaining British Aerospace in public ownership seems to have been overtaken by events. Certainly, the hon. Gentleman could produce no beter and continuing justification when I taxed him with the matter.
The truth, as we can see clearly from Labour Back Benchers' speeches today, and such contributions as there may have been outside the House, is that the one overwhelming reason why Labour hon. Members are determined to oppose the Bill is the simple Socialist dogma of "What we have we hold". They are determined that the commanding heights of the economy, of which the aerospace industry is one, should remain in Socialist hands. It is nothing more complicated than that. It is as simple as that and as wrong as that.
We have heard mention today of an organisation called the Association of Scientific, Technical and Managerial Staffs. In the last election that body was responsible in my constituency for circulating a letter to electors. Like other hon. Members in the South-East, I have in my constituency a fair number of people who work in British Aerospace factories. Aerospace is a matter of as much concern to us as it is to the people

of Bristol or Preston. I make no apology for reminding the House of that. The letter read as follows:
Dear Colleague,
RE: BRITISH AEROSPACE INDUSTRY AND THE FORTHCOMING ELECTION.
No doubt many of you will have read a report of the Tory Election Manifesto, within which they are proposing to sell back to private industry the so called profitable sections of British Aerospace.
This is Political prejudice gone mad, as there are now many people even in the higher echelons of British Aerospace Management who originally opposed Nationalisation, but who now, however grudgingly, accept that the only sensible way forward for British Aerospace is within Public Ownership.
ASTMS members cannot be unmindful"—
this is a touching bit—
of the amount of time and effort put in by the Association's Officers and M.P.s over recent years, not only to secure the industry into Public Ownership, but equally important to establish a programme of work which would offer a large measure of Job Security to those working in the industry.
These aims have been largely achieved. Surely our members and other Trade Unionists are not now prepared to put all this at risk.
In short, we need the return of a Labour Government to ensure the continuing stability of Your Industry and Your Job.
The letter was signed by the national officer of ASTMS, who lurks somewhere in Glasgow.
Unhappily, that touching appeal totally failed to convince the electors, because those of them who knew the industry at first hand knew that there was a great deal in the letter that did not stand up to close examination. Many of them know very well why the industry is going through a very good period, and why it was doing so at the time of the election. It is not because of nationalisation but because of the maturation of projects that have been developed by design staffs, research staffs and market researchers over many years before nationalisation.
I am sure that the hon. Member for Nuneaton (Mr. Huckfield) knows that this industry has a very long time scale between the inception of a project and its coming even close to the point of profitability. I hope that he will explain that to his right hon. Friend the Member for Deptford when he returns. It is extremely important that it should be understood, so that his right hon. Friend says nothing silly about the present success of the industry having anything whatever to do


with nationalisation. Nationalisation did not produce the market-suited products which are now returning profits to the corporation involved.
Unhappily for us, I suppose, ASTMS is not an association to be persuaded by the loss of a general election, as we just heard from the hon. Member for Preston, South. Trade union voices are still being whipped up in opposition to the Bill.
My friend, Mr. George Elliott, who is chairman of the combined committee of shop stewards at the Weybridge factory, felt impelled to tell the local newspaper some time back:
The Government's statement that it will sell off shares in British Aerospace is a near criminal attempt to undermine the future of the industry and our viability to compete in the future.
I know Mr. Elliott and I am aware of his politics. I am not wholly surprised that he should say that sort of thing, any more than I am surprised to find that Mr. Hoyle, who was, until the last election a Member of this House—and I do not regret that he is no longer a Member—is quoted, in an article printed in the Morning Star as having certain things to say about the Bill. He sees
the collapse of a thriving British aerospace industry if Tory plans go through, with the break up of major design teams, the loss of skills and morale destroyed. A human investment squandered.
Mr. Hoyle goes on to say:
We have now got to be determined to fight with every means available. We've got to build up the resistance of the labour force against Tory attacks. Tory patriotism doesn't extend to the public sector. They'd rather see a foreigner owning our industry if it means private enterprise, rather than us all owning it publicly.

Mr. Les Huckfield: Hear, hear; spot on.

Mr. Onslow: "Hear hear", says the hon. Member for Nuneaton. As a member of the national executive of the Labour Party, he no doubt feels that he has to say that. Perhaps we can discount those rather false cheers.
The central fact, which we understand well, is that politically-motivated men, if I may coin a phrase, will do their utmost to stir up the labour force in British Aerospace factories to resist the Bill and, in the process, undermine the continuity of their jobs.
Let us not suppose for a moment that any such suicidal action as the hon. Member

for Nuneaton and his friends might try to embark upon would be good for our exports and sales of this industry around the world. I am not suggesting that they care about that, but I say it so that they should know it and have it said in their presence. If they would rather tear the industry to pieces, bring it to a dead halt and get the work force out on strike than see it being successful and meeting the export targets and sales, which are available to it, that is their responsibility. However, they should not think that the rest of the country is unaware of what they are doing or, indeed, that they have the support of the work force.
I have met constituents who work in British Aerospace and also trade unionists in the industry. I have discovered that their principal concern is now wholly out of date. They were concerned that there would be a break-up of the corporation and that the dynamics side would be hived off. We now know that that will not happen and, therefore, it need no longer concern them. The only possible remaining cause for concern—again, the hon. Member for Nuneaton probably knows of it but does not wish to admit it—is not so much centred on the launching aid and whether it will be available as on the availability of finance for the activities of the corporation as a whole.
As launching aid is confined to the civil side, and as the military side is directly funded by agreement from the Ministry of Defence Vote, the guarantee of essential public funds is much greater than any Opposition Members have so far suggested, particularly bearing in mind another fact that Opposition Members do not seem to have hoisted in, which is that in that sense there is no major civil project waiting for launching. We must allow Labour Members their little froth at the mouth, but certainly none of the financial anxieties they have sought to stir up corresponds to the situation in the real world.
The mood of employees in the aircraft factories that I know is primarily one of wanting to be left alone to get on with the business of designing and selling aeroplanes throughout the world. Employees want minimum interference in that activity. They want a considerable reduction in internal bureaucracy, and they want


civil servants off their backs wherever this can be achieved. The Bill will have a powerful influence in that respect.
Naturally, we all want to see more people working in the industry. At a time when high unemployment is the great scarecrow before us, there are jobs going begging in the aircraft factories. The recruiting vans are out trying to get skilled workers to the shop floor at Weybridge, and I dare say the same is true of Preston. In fact, I doubt whether there is any factory in the entire British Aerospace group which at present could not use more skilled labour.
As a matter of national policy, we should give every possible encouragement to those industries which have work to offer. The best way in which we can encourage the aircraft industry is to pass this Bill and give the stability and certainty which it offers.

Mr. James Hill: This has been a most interesting debate. I put hon. Members who have attended it into three categories—the Front Bench and the Whips who have to attend, hon. Members with constituency interests—whether these are aviation or not is another matter—and Members such as my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) who is an aviation enthusiast. I like to think that I am in the third category.
The design, progress and perfection of the flying machine over the past 30 years has changed the whole concept of aviation. I remember many years ago when the design teams were designing the Princess flying boat and the Brabazon aircraft and there were no engines with sufficient power to move them through the air at sufficient speed.
My hon. Friend the Member for Bristol, North-West (Mr. Colvin) brought back nostalgic memories when he talked about Filton. I remember when the largest concrete runway in the world was created there for the Brabazon and I had the honour to be transferred from the flying boat fleet to the Stratocruiser and Constellation fleet to operate out of Filton. Therefore, I believe that the third category is right for me.
The debate today has made heavy weather of what is a small Bill. The

debate has been broadened, with the permission of the Chair, so that we have talked about everything but the Bill. The Bill proposes that British Aerospace should in future operate within the framework of the Companies Acts. That will apply to several other nationalised industries, and the Government may wish to sell the shares on the open market. The ownership of the industry will therefore be transferred from the present statutory corporation to a company incorporated under the Companies Acts. Initially the shares will be held by the Government, who will eventually make them available to private ownership.
I welcome the Bill because it achieves something that all parties would agree with, namely, that employees in the industry should be given a special opportunity to buy shares. Other progressive companies, such as ICI, have in the past brought employees into those companies through share ownership. The Government have said that they wish to retain about half the shares. Will the Minister inform us whether that "about half" is 51 per cent., 49 per cent, or some lower figure? That question has been asked several times today.
Much of the Bill deals with the establishment of the new company. Clause 1 deals with the vesting of British Aerospace business and its property, rights, liabilities and obligations in a limited liability company to be called British Aerospace Limited. The Secretary of State will decide upon vesting day, but it is obvious that it will be shortly before the date upon which shares in the new company will be offered for sale. The Secretary of State mentioned that he hoped to secure continuity in management at board level, and I welcome that. When a company issues shares there is nothing more unsettling than the board being apprehensive about the future.
Clause 3 provides for shares in the new company to be issued by the Secretary of State. He will decide the nominal value of the shares that are issued, but he will not be able to dispose of them or give any directions concerning their disposal unless the Treasury gives its consent. However, clause 4 says that any excess of the amount that the Government invested in British Aerospace over the nominal value of the new company's initial share capital would be placed in a


special reserve that could be used only for issuing fully paid up bonus shares.
In clause 6 the Secretary of State is required once again to gain the consent of the Treasury in appointing nominees to receive, subscribe for, or acquire shares in the company. The Secretary of State's power is thereby curtailed because he must have the consent of the Treasury.
The key to the scale and rate of disposal of shares in British Aerospace Limited, and to the balance between private and Government control within it, is provided in clause 7. That clause deals with the setting up of a target investment limit for Government shareholding in the company. Once the company ceases to be wholly owned by the Crown the Secretary of State will, by statutory instrument, fix the target that will relate to the shares that he, or his nominees, will hold. The Secretary of State must dispose of any shareholding that exceeds the new target limit.
Unfortunately, my hon. Friend the Minister of State is not present this evening. I am particularly concerned about one or two statements that he has made. I should have liked him to make clear that at the time the target limits had not been settled. In other words, there is no reason this evening for debating target levels. I am sure that I shall get clarification on the amount that the Government will retain in the new company.
We have had one or two references this evening to the statement made on 8 November by my hon. Friend the Minister of State. That statement was ridiculed by Opposition Members. Of course, once again, it was selective ridicule and hon. Members did not carry it forward to say that the statement continued, when talking of the shares, to the effect that the Bill would enable the public at large, and particularly the employees of the company, to take a more direct stake in the aerospace business for themselves rather than through the anonymous hands of the State, and that the national interest would continue to be represented by substantial Government shareholdings.
We have heard much this evening to the effect that this will mean the collapse of morale, that the board will probably wish to go against the Secretary of State in this matter and that the whole of the

British aerospace industry is in peril. I do not read it quite like that. I think that this is an opportunity for British Aerospace to involve itself in more aid more private investment.
The right hon. Member for Deptford (Mr. Silkin) said that he was alarmed that perhaps pension funds or institutions might take over power on the board. I would welcome that. I realise that pension funds are in a general picture. It may even be a trade union pension fund.

Mr. John Silkin: Perhaps I might clarify what I meant. I agree with the hon. Gentleman that if such funds come in, and at any rate as long as they are in, there is no danger from the point of view of control. That is perfectly true, and that is their history. What worries me about pension funds and institutions—this may be within the hon. Gentleman's experience, too—is that they tend to stay in for a relatively short period and move into something else. I am much more worried, as I tried to point out, about the fact that there is nothing whatever to stop what really are foreign competitors from having a large say, if not entire control—although it depends upon the Government's holding—simply by the expedient of setting up companies in Britain. I can see how an attractive offer made to a pension fund for its shares might very well start that process moving. That is what I was concerned about.

Mr. Hill: I think that protection is well provided in the Bill. No more than 15 per cent, of the shares will be available to foreign investors. I should make the point that we must not always think that foreign investors will of necessity bring down a British company—quite the reverse. The distribution of sales of this giant industry is such that only 45 per cent, of its sales are in the United Kingdom; the remainder are throughout the world. To give only a couple of examples, 14 per cent, of sales are made to Europe and 26 per cent, to the Middle East. Therefore, obviously its export market is considerable. It may well be that any foreign interests that pick up shares will be the door through to more foreign contracts. Therefore we should not take too jaundiced a view of 15 per cent, of the possible share capital going to foreign investors.
There was some criticism earlier that this industry produces weapons of death. It was obvious from what was said by one or two of those with constituency interests that they were almost talking against the livelihood of their own constituents. It is interesting to note that in 1978 the total sales of British Aerospace were £231 million for civil aircraft, £284 million for military aircraft, £250 million for defence systems, £104 million for support systems and £15 million for space projects. It will be seen that of that total of about £900 million only £231 million could be seen to fall within the category criticised by someone who was objecting to weapons made for defence or attack. A constituency Member with one of those factories in his constituency may be faced with a dilemma, because if his view prevails the result might be considerable unemployment in his area.

Mr. Campbell-Savours: Will the hon. Gentleman accept that there is room for moral objection to some forms of industry and that Members have a right—indeed, a duty—to express that moral objection if they find that what is being done is offensive? Other Members may have a constituency interest, but there is room for both sides in this debate.

Mr. Hill: I think that by the moderate way in which I have approached the issue I have shown that I agree that there is room for a moral decision by a Member of Parliament. I have said that out of sales totalling £900 million last year only £250 million was from civilian aviation. Those who support this industry as a nationalised one have accepted that fact. However, this is a moral argument which I do not think will enter into the discussion of the Bill when it goes into Committee.
Those figures make clear the British Aerospace industry's dependence upon its ability to obtain and fulfil military and defence contracts. I have already said that they are worth so much more to the industry than anything that can be provided by civil aviation. Even the wonderful Jetstream 31 and the A300 Airbus, and all those projects which are so excellent, so progressive and so bright for the future of the aerospace industry, cannot compete with what happened last year, when we won an order for 50 Hawk

training aircraft for Finland, and other export orders for Hawks worth £165 million. We had already supplied 81 of these aircraft to the Royal Air Force.
The Harrier has been spectacularly successful, and British Aerospace has a technological lead in this area. It is a pity that some of the pilots are not as highly trained as were the technicians and designers who originally designed the Harrier. Nearly 220 Harriers have been sold to the RAF, the United States Marine Corps and the Spanish Navy, and there are potential purchasers. Both India and China have expressed considerable interest in the aircraft. I sincerely hope that we shall get a trade contract with China to provide the Harrier. Production and modification work continue on the Buccaneer, the Phantom, the Vulcan and the Shackleton. India has also agreed to the purchase of the Jaguar international aircraft. That will be followed—and I believe that every hon. Member will agree with this—by the manufacture in India of these aircraft under licence, which will provide much sought-after employment in a continent that needs every ounce of help that it can get.
As with the civil aviation side, there is every reason to believe that opportunities to secure new markets will increase as long as high standards of competitiveness and technology are maintained. I make that point. Earlier the point was made that the demise of Rolls-Royce was a managerial decision, and nothing to do with the technology of providing that engine. We have a good future in the civil aviation world. That applies also to the dynamics group of British Aerospace, which produces air-launch missiles, Army and naval missiles, and space systems. Last year that group achieved a turnover of over £270 million. I suppose that the orders that were placed by Iran were a grave political risk at the time, and we shall now be looking for other markets.
The new company will be beneath the umbrella of the Secretary of State for some time. I do not think that any Conservative Member can possibly ignore the election manifesto. We are doing precisely what we said. We shall sell off shares and make them available to employees. The debate last night is almost a replica of this debate, but with different names.
The Secretary of State and the Under-Secretary of State are to be congratulated on bringing forward what seems on the surface to be a simple Bill in the form of debate, but which is a complex share issue. I shall vote for the Bill this evening. Anything that gains further for the public purse, cuts down the public sector borrowing requirement and relieves the pressures on our Welfare State has to be recommended by both sides of the House. The money from the individual shareholders—and I sincerely hope that there will be many thousands of them—will go into the Treasury to help support the Chancellor during this difficut time.

Mr. Campbell-Savours: The hon. Gentleman refers to the gains and savings for public expenditure, but it is my information that British Aerospace makes a profit. The reduction in the shareholding by the Government will be a loss to public expenditure and to the Treasury.

Mr. Hill: If it is a profitable company and shares are sold, one must lose that element of profit. However, high minimum lending rates and high borrowing percentages have been forced on the Chancellor, and the Government and local authorities will find it increasingly difficult to obtain money from the investment markets. If this is a good issue it will immediately bring in hundreds of millions of pounds, which I hope will offset the public sector borrowing requirement. In the long term it will certainly be an advantage. Within a short time—

The Under-Secretary of State for Industry (Mr. Michael Marshall): My hon. Friend the Member for Southampton, Test (Mr. Hill) and the hon. Member for Workington (Mr. Campbell-Savours) have raised an issue that is perhaps helpful to the House. It is important to understand that, on the formation of the new company, existing debts will be extinguished. Those debts include £15 million to the national loans fund and £27 million public dividend capital. There will be that immediate opportunity to see a reduction in that part of the public sector borrowing requirement.

Mr. Hill: Once again the Under-Secretary comes to the rescue of a Back Bencher who may not have had a complete answer.
The gains to the company through the subjection of management decisions to the reality and discipline of the market, rather than to political interference, should ensure the health of the company in the face of stiff international competition. I hope that the board will take the Bill in the way that my right hon. Friend the Secretary of State intends it to be taken. There is no disturbance, and it should be looked upon as a normal share issue. We hope that it will bring health and prosperity to every employee of British Aerospace.

Mr. Barry Sheerman: I have listened with great interest to the debate. I am somewhat surprised that the shape of the debate has been not about substance but about structures. I should have expected to hear a debate about the substance of private and public ownership, but the debate has developed to consider the sort of public ownership that is appropriate in the late twentieth century. Bearing in mind what the Government said in their election manifesto seven months ago in May, that comes as a surprise. As late as July, many of my right hon, and hon. Friends suspected that the Conservative Party would keep its promises in office to sell off the profitable parts of the aerospace industry to the free market—the private sector. That has not taken place. Today's Bill is a Conservative version of nationalisation, to use their word. Our term is public enterprise.
Today's fundamental debate has been about the appropriate structure for the aerospace industry. It appears that the Conservative Party has been won over to the view that some sort of public control must be maintained. We should not forget the sort of atmosphere in which the debate takes place. On Thursday I had a discussion at lunch-time with several industrialists from the textile industry in West Yorkshire. That was the day when the minimum lending rate was raised to 17 per cent. The look on their faces was something to behold. A well-known industrialist who was sitting next to me commented that it was easier to walk on water than to make a profit by borrowing money at 20 per cent.
In that context, we are discussing a Bill that will change the structure of


British Aerospace. It is surprising that the Bill, if it has any guiding light, takes its structure from British Petroleum, which appears to recommend itself to the Secretary of State. BP is a successful company with a public stake which is not too oppressive and which allows commercial decisions to be made. It is a successful and profitable enterprise. Perhaps this soft sell of the Conservative Government is the way in which they can retain a public stake in large industries when they do not have the courage of their conviction to sell off to private enterprise. They know what a disaster that would be for the national interest, the future of employment and the future of the company.
Tonight we should ponder on the effects of this sort of public enterprise venture that is foisted on us by a Conservative Government. I suggest that it reaps the worst of both worlds. It has neither the advantage of the cut and thrust of the competitive sector, nor does it have anything to recommend it in terms of the British Aerospace Corporation that was set up by the Labour Government after that long travail in the previous Parliament.
I believe that we should seriously consider why the Conservative Government have not taken the free market as the simple answer. Time and time again the Secretary of State has proclaimed the advantages of free enterprise, the free market and the competitive ideal. What worried me most about the right hon. Gentleman was his reasonably simple nineteenth century devotion to competition. When he looks at the real problems of the British aerospace industry I believe that he will be confronted with the problems of his naive model of the world when viewed against the reality of complex industrial civilisations in this latter half of the twentieth century.
For example, there is the near monopoly position that is inherent in the aerospace industries of every sophisticated country. There is a difficulty, because enmeshed in that enterprise is the prominent place that national security must play. In addition, as my hon. Friends have said many times, there is the massive capital investment that so often deters private investment. In fact, it makes private investment on its own—

unaided—impossible in every advanced country of the world. As a result, I believe that the right hon. Gentleman must come to terms with the real world. It will be a great relief to Labour Members and to the British public when the right hon. Gentleman comes to realise that naive beliefs in nineteenth-century laissez faire enterprise do not hold up when faced with something as sophisticated as British Aerospace.
What worries me is how that view is sold to the Conservative Party Conference and to Conservative Party members. Of course, Conservative Party members are the real extremists, although the national press may not point it out. For instance, very little real muck and brass exist in areas such as Surrey, and enterprise does not really flourish. One must visit my part of the world in Yorkshire to see where the real work is done. The right hon. Gentleman must sell his package. He must say "What we shall do is to make it like British Petroleum. We shall have a 50/50 share. We shall not have Government intervention or control." In fact, the right hon. Gentleman specifically said today that there would not be Government control.
I suggest that the question of responsibility to Government is so important in the case of British Aerospace that the right hon. Gentleman would be neglecting his duty as a Minister of the Crown if he did not accept that there was a clear responsibility on him, and on the Government, to have control of British Aerospace if it is to have an assured and decent future and if the national interest is to be preserved.
Many Conservative Members have talked about the spin-offs of technology. The spin-offs have been in industries in which many of them have a stake. It was ironic that the hon. Members for Woking (Mr. Onslow) and Ruislip-Northwood (Mr. Wilkinson) were ardent about the problems in British industry. Surely the problems were epitomised by the backgrounds of the hon. Gentlemen—namely, Eton and Harrow. They were proclaiming great knowledge of British Aerospace. They claimed to know the problems—and how to solve them—of British management and the British work force so that they might work competitively and efficiently. I suggest that the background of some Conservative Members militates against a real solution to the problems


of productivity, efficiency and a successful aerospace industry.
When we have a tussle between pragmatism and ideology, as is typified by the introduction of the Bill, neither pragmatism nor ideology comes off very well. The result is that we slump somewhere between the two extremes. That means that there is no new start. There is merely the harming of a brave enterprise that started in 1977 when British Aerospace gained our industry a new start, a new future, a new hope. The Bill will destroy that hope. It will destroy that future. It will do so at the cost of a secure relationship between public enterprise and the national interest.

Mr. John Browne: It is unfortunate that I shall be able to speak for only four minutes.
I consider that the essence of the Bill is ownership, whether it should be State ownership or genuine public ownership—in other words, ownership by us all as individuals or by pension funds, trade union funds, or other types of institution. My right hon, and hon. Friends feel that history has shown that nationalised industries tend to be inefficient and largely unprofitable, despite the huge monopolies that they have. They also tend to be slow-moving. That is something that we cannot afford if we are to be competitive in high technology industries such as aerospace.
Nationalised industries have access to funds, but sadly they do not have much access to market funds, which are looking for a profitable return. They have access to investment by Government, who are looking for a political rather than a commercial return. State-owned industries tend to have political decisions made within them that affect their profitability. An example is the production of the HS146, a short-haul 100-seater aircraft. Despite a complete lack of sales orders, production goes ahead at Welwyn-Hatfield and Bristol. Strangely enough, those are both marginal constituency areas.
Nationalised industries are major employers but they are hardly providers of profitable jobs. They are providers of unprofitable jobs in the short term. In the long term those are unprofitable jobs and lost jobs.
No Government have a duty to manage commercial companies. If a Government were to concentrate, as I believe the present Government are doing, upon their classic duties of defence, law and order, a sound economy, a sound currency and an effective social service, they would hardly have any time let alone wish to interfere in commercial enterprises.

Mr. David Lambie: What about Rolls-Royce?

Mr. Browne: History shows that Government, besides having no duty to be involved in the management of commercial companies, have no skill to manage such companies.
Professionally trained and skilled managers should manage commercial companies. They know how to test the markets.

Mr. Lambie: What about Rolls-Royce?

Mr. Deputy Speaker (Mr. Richard Crawshaw): If the hon. Gentleman wishes to ask questions, he should stand.

Mr. Browne: Those managers have the professional skill to test markets, establish market needs and find market opportunities, assemble production teams, especially in the difficult areas of high technology, to motivate those teams to be profitable, and to ensure the high quality of design and production, good deliveries and good after-sales service. In short, they can ensure profits for companies such as this which will end up as profits for all of us in the country and provide a profitable form of job creation.
The Government have neither the duty nor the skill to manage commercial companies. In short, the Government have no legitimate role in the management of commercial companies.
I support the Bill, first because it allows for mixed ownership, Government and public—genuine public ownership by all of us in the nation. Secondly, it allows the Government time to get on with their own job and govern the country. Thirdly, it allows management to get on with its own job, which is to manage companies such as British Aerospace. Fourthly, it will allow British Aerospace to play a vital part in high technology research, production and sales, which will generate good long-term earnings for the company and the country. Basically it allows


this country the chance of remaining a developed, technological nation.

Mr. Les Huckfield: This has been an interesting debate—in spite of the fluctuation in the level of attendance—because of the quality of the speeches. The hon. Member for Woking (Mr. Onslow) spoke for nearly 30 minutes, and spent most of the time insulting my right hon. Friend the Member for Deptford (Mr. Silkin), hardly giving us one sentence of his own views. The hon. Member for Southampton, Test (Mr. Hill) went into one of his European monologues. There were some contributions made with feeling by my hon. Friends the Members for Bristol, North-East (Mr. Palmer) and for Preston, South (Mr. Thorne), who obviously know a great deal about the industry, having devoted a great deal of their parliamentary lives to representing the interests of their constituents.
Perhaps the most peculiar speech of the debate was from the Secretary of State. The most remarkable aspect of his performance was that he clearly did not know why he was introducing the Bill. He clearly did not know those arguments with which he should have been provided for the introduction of the Bill. Later on, there was an explanation, coming, I presume, from a brief from the Conservative Whips' office. The rationale, the reasoning behind the Bill, was that it was in some peculiar way supposed to take the industry out of politics. I can only say that that is not our view of the matter. It certainly will not be the view of the next Labour Government. If that is the only justification that the Government can bring forward for the introduction of the Bill, I can only say that it is yet one more example—only one of a continuing series—of publishing Bills and thinking of the consequences and implications afterwards.
The Secretary of State for Trade has referred to taking the whole operation of a nationalised industry out of the Government's balance sheet. I am not quite sure how we are supposed to do that. The hon. Member for Chingford (Mr. Tebbit)—who I am pleased has joined us this evening—has referred to avoiding investment programmes getting muddled up

with the level of the rate support grant. Again, that is a peculiar justification for the two Bills we have considered over the past two days. I understand why the Government did not consult the unions.
Frankly, they would not have had anything to tell the unions. I can also understand why they did not go to the normal procedural lengths of issuing a consultative White Paper. I cannot imagine what they would have put into a White Paper.
With the Industry Bill and the Civil Aviation Bill, this is one more example of the technique of publishing now and, with a bit of luck, getting the Bill through by next March. Then, according to the Tories, the Bill will start making its contribution to the reduction of the public sector borrowing requirement. If there is any logic behind the Industry Bill, the Civil Aviation Bill or this Bill, it is that sort of logic.
The Bill is not designed to help the aerospace industry. I do not even think that it is designed to help the economy. The purpose of the Bill is to satisfy those PSBR fanatics in the Treasury and the Tory Party who think that at all costs we must reduce the proportion of national resources borrowed by the Government. All that is despite the fact that our public sector borrowing requirement is already proportionally lower than that of most European Governments. Nevertheless, that is the Government's rationale. They hope to reduce the PSBR by £1,000 million this year. The Bill is needed to help reduce the PSBR by £500 million—they think—in the next financial year.
I wish that the Secretary of State had given us that explanation. At least we could have understood it. We certainly did not understand the reasoning and the explanation that he tried to put forward. I hope that by the time the Government get the Bill into Committee they will have thought of the reason for it, after having published first and then tried to think out the implications later.
If the Government do not know much about the Bill, and the reason for it, they certainly do not know much more about the aerospace industry. Judging by the speeches from both Government Front and Back Benches, they might just as well be living in cloud-cuckoo-land. When the


Secretary of State was launching this Bill at a press conference he said:
The Goverment will not expect to intervene in the administration of the company as a commercial concern.
When the Minister of State was pronouncing at the press conference, he said:
By introducing the disciplines of the market place, and by ending the blurring of commercial objectives … the new company will be made fitter, more efficient and more capable of surviving profitably in highly competitive world markets.
What "markets" do the Government mean? I know that there are lots of reading lists circulating in the Department of Industry and it is a pity that the Secretary of State was not furnished with a copy of the Financial Times aerospace survey of 4 June this year. The survey examined aircraft industries around the world and shed some interesting light on those industries, particularly in the context of the introduction of this Bill. The survey showed that in almost every other major aerospace industry throughout the world Governments are becoming more, not less, involved.
That is certainly the case in the United States, France, Germany, Italy and Japan. In all those countries, in which the so-called disclipine of the market place is supposed to be operative, Governments are becoming increasingly involved in the aerospace industry. Last year the United States Government were the aerospace industry's largest customer, accounting for no less than 71·5 per cent. of the industry's total sales. Seventy-seven per cent. of the sales of McDonnell Douglas went to the United States Government, as did 57 per cent. of the sales of Lockheed.
That is an example of the American Government becoming more involved, and not less involved. I am telling Conservative Members something about the industry which they ought to know, and to which they should have referred. Take the example of Boeing—a company which is an example of the free enterprise that Conservative Members are supposed to admire. Statements emanating from Boeing say that the company is now working hard on its 767 project and that it expects tough competition from Europe
not least because it has the backing of the French and West German Governments who had been prepared to support a range of financial and political inducements which Boeing cannot match.

That is a statement from Boeing in the United States about its competition from France and Germany, competition which this country has now joined. The pronouncements from Boeing, that bastion of American free enterprise, continue:
In recent years, half of Boeing's sales have been made abroad and the test facing the company is the extent to which it can get its hold on the overseas market over the next five years in the face of stiff competition from Airbus Industrie.
At the same time as that French-Government and German-Government sponsored—and now British-Government sponsored—effective competition is starting to improve and to threaten Boeing, our Government wish to pull out.

Mr. Wilkinson: rose—

Mr. Huckfield: I shall give way in a moment. I had to sit and listen to the remarks of the hon. Gentleman.
Although the Government have said that they will stand by the undertakings given by the Labour Government and that they will carry out the obligations adhered to by that Government, which was responsible for the inclusion of British Aerospace in Airbus Industrie, the fear will grow that although Airbus Industrie has the backing of the French Government, and certainly the backing of the German Government, the future backing of the British Government is in doubt.

Mr. Wilkinson: The hon. Gentleman will be aware that in the early days Britain was simply a subcontractor to Airbus Industrie on the wing, and therefore in no position to influence the policy of the board. But now it is a full partner, to the extent of 20 per cent., and particularly a full partner in the development of the new 310. In no way can Britain be said to be dragging her feet, and my right hon. Friend the Secretary of State has emphasised that.

Mr. Huckfield: British Aerospace has only become a full partner of Airbus Industrie, with negotiating rights with money provided, guaranteed and undertaken by the last Labour Government. That is why British Aerospace was able to join Airbus Industrie, and why it is now playing a more effective role in that organisation.
If the Government do not believe what Boeing says about the efficacy of French


and West German State-supported competition, why do they not consider what the German industry says? I shall quote again from the same Financial Times survey. Presumably right hon. and hon. Members opposite read the Financial Times from time to time. It tends to take their point of view. That survey, speaking of the German industry, states:
The industry has been resigned to the inevitability of a merger for several years now, acquiescing in the view of Herr Martin Gruener, the Economics Ministry State Secretary who is Bonn's co-ordinator for the aerospace sector, that West Germany needs the 'single voice' in aerospace that both Britain and France have had since the latest nationalisation measures in each country.
That is the German industry giving its view of the way in which the French Aerospatiale and British Aerospace have been nationalised. The German view is that its industry will have to move towards precisely the same structure as the Labour Government set up [Interruption.]—

Mr. Deputy Speaker: The House listened to most of the speeches in reasonable silence. I hope that the hon. Gentleman will be allowed to make his speech.

Mr. Huckfield: We know who is causing the trouble for the British aerospace industry. Right hon. and hon. Members on the Government side will bring devastation to this industry through their fanatical dedication to the reduction of the public sector borrowing requirement.
If we review aerospace industries around the world—

Mr. F. A. Burden: rose—

Mr. Huckfield: I am not giving way to the hon. Gentleman. He has only just entered the Chamber. He always comes in at this time.
If we examine aircraft and aerospace industries around the world, we find increasing Government involvement, Government funding, Government guarantees and Government participation. At a time when Government guarantees, participation and ownership are proving most effective, this lot wants to turn our aircraft industry round and go precisely in the opposite direction.

Mr. Geoffrey Dickens: On a point of order, Mr. Deputy Speaker. I am only a young Member, but when I used the expression "the rabble on the opposite side" Mr. Deputy Speaker called me to order. The hon. Gentleman says "this lot" when he surely means "hon. Members across the Chamber."

Mr. Deputy Speaker: I have heard the expression used frequently in the House. It is not one to which exception is taken.

Mr. Huckfield: The physical girth of the hon. Member for Huddersfield, West (Mr. Dickens) belies his political weight.
It is significant that when American manufacturers, those bastions of free enterprise and entrepreneurial ability, have most to fear because the German, French and Britsh industries are combining most effectively, and when competition starts to increase and Airbus Industrie starts to achieve success, this Government want to change the whole organisation, administration and financial setup of the British aerospace industry. Is it not significant that, just when things are going our way and British Aerospace is starting to turn into the success that many of us knew it would be, this lot want totally to undermine that organisation?

Mr. Bowen Wells: rose—

Mr. Russell Kerr: Sit down, Curly.

Mr. Huckfield: The hon. Member for Hertford and Stevenage (Mr. Wells) is but a fleeting participant in our affairs. The hon. Gentleman has only a temporary transient passage and a short lifetime in the House. Even given that, I cannot forget that he delayed the House for nearly half an hour this afternoon.

Mr. Wells: rose—

Mr. Deputy Speaker: Order. The hon. Member for Nuneaton (Mr. Huckfield) is not giving way. The hon. Member for Hertford and Stevenage (Mr. Wells) must resume his seat.

Mr. Huckfield: The electors of Hertford and Stevenage were sadly deceived.
Whatever happens to the industry in the long term, it looks as if it will pass from the control of this House. That


should worry hon. Members on the Government side as well as on this side.
The Secretary of State said when introducing the Bill that Ministers were specifically eschewing responsibility—that is food for thought—and that the whole purpose was to remove the responsibility for decision making from Ministers, who were not equipped for the role, to shareholders and their management. That may sound great, but, while it means that the responsibility is being shifted from Ministers, it is being shifted from Members of Parliament as well.
What we should be concerned about is that over the past three or four years in decisions on Airbus Industrie, on the further generations of the Rolls-Royce RB 211 engine project and the Hawker Siddeley—as it was called—146 project, the industry has been engaged in taking manufacturing decisions that will seal its fate economically, politically and in employment terms for the whole of the next generation. If Conservative hon. Members are saying that the Government should not be involved in that kind of decision taking, let them tell the House now. Their constituents will not accept it, and the House will not accept it.
In the past three or four years we have been involved in the most momentous decisions, which will affect the capability of the British aerospace industry and of the British aero-engine industry to secure their proper share of at least 3,000 new aeroplanes. That will be the size of the market over the next generation. If the British Government do not have a right to be involved in that kind of decision, what decisions can they be involved in?

Mrs. Elaine Kellett-Bowman: Running the country.

Mr. Huckfield: Under the kind of framework that the Government intend to assemble, the kind of structure that they intend to create, if we dare to put even a parliamentary question about that kind of thing, we shall presumably be told "That is not a matter for the Secretary of Slate; it is a matter for the management." I find that intolerable. When we are not allowed to ask questions even about that kind of decision taking, the House and the whole country will also find it intolerable. After all, it is taxpayers' money that we are talking about.
The other matter that we have not heard about this afternoon is what kind of targets the Government will set for the industry. The Under-Secretary of State for Trade, the hon. Member for Chingford, is very fond of profit maximisation. He used to ask me in Committee and on the Floor of the House, when I was a Minister, what kind of profit we thought we would make on the airbus and on what was formerly called the Hawker Siddeley 146.
But the hon. Gentleman knows, as I do, that if profit maximisation had been the main criterion, if making the biggest possible profit had been the main yardstick, neither British Aerospace nor the British aircraft industry would even be part of Airbus Industrie, and they would not have gone ahead with the Hawker Siddeley 146 project. That is because civil aviation projects, by their very nature, have a long gestation period and a very long profit-making period.
Even Airbus Industrie, which the hon. Member for Ruislip-Northwood (Mr. Wilkinson) told us this afternoon was so successful, will need as the hon. Gentleman knows as well as I do, sales of at least 700 copies before it even starts to wash its face—and it has not even got as far as 350 orders yet. Yet Conservative hon. Members talk about the need for British Aerospace to make a profit. I can only say that had that been the case under the last Labour Government, if we had insisted rigidly and dogmatically on profit maximisation, we would not now have much of an aircraft industry left. That is the truth.
I quote again the Financial Times—Conservative hon. Members' newspaper not ours; their readership, not ours. [HON. MEMBERS: "Does the hon. Gentleman read it?"] I read it daily. The editorial on 24 July this year said:
As for the current workload, it is highly doubtful whether the BAC 146 feeder jet—and perhaps the investment in Airbus Industrie—could have been financed on a commercial basis. If the Government follows a totally commercial policy in its attitude towards British Aerospace, then the British aircraft industry will almost certainly contract in size.
That is what this proposal is all about. That is the inevitable result of this kind of proposal. Short term profits are what the private shareholders will want; they will not want dividends in 20 years time.


If the new company will not be allowed to borrow internationally with a Treasury guarantee, I predict that the only sure long-term result of the Bill will be the contraction of the British aerospace industry. That is what insistence on short-term profit maximisation, and having to borrow externally without guarantee, will mean.
If the new company will not be able to borrow so easily internationally, and is unable to borrow from the Government—we have had some pretty good indications from the Government that the company will not find obtaining finance from the Government very easy—it will have to start selling assets.
It is interesting that Government Members, particularly the hon. Member for Preston, North (Mr. Atkins), who will not be here very long, because the electorate got the name wrong—

Mrs. Kellett-Bowman: Yes, he will.

Mr. Huckfield: Government Members have been almost dogmatic in their insistence that the company will stay as a unified whole, which is why the Bill mentions only one company. How can the Government guarantee that? I predict that if the new company cannot obtain money from the Government or borrow internationally because it does not have a Treasury guarantee, it will probably be forced into selling off its assets. That is why some of the former owners from, dare I say, GEC are already buzzing round the dynamics group. Those who made a mess of the industry previously know that the dynamics group is where the profits are. The dynamics group had a turnover of £270 million last year and orders worth £1,000 million. With that kind of success, we can understand why former private owners are now buzzing around the dynamics group.
Is the right hon. Gentleman absolutely sure that he can guarantee that under that kind of commercial pressure assets will not be sold? I have heard nothing from the right hon. Gentleman this afternoon to assure me that assets will not be sold in future. We know the parts that will be sold. It will be those parts that make a profit, and not the parts that British Aerospace needs to ensure its survival in

a difficult and internationally competitive industry.
If the Government do not believe us, perhaps they will read carefully the Plowden report. The Plowden committee was a domestically and perhaps internationally acclaimed body which certainly did not have a Left-wing majority on it.
The conclusions at page 95 of the report referred to the dichotomy of management structures in the Government and the industry. It reads:
Of the possible means of remedying this situation, the balance of advantage favours the Government acquiring a shareholding in BAC and in the airframe elements of Hawker Siddeley, including their guided weapons interests.
That is in the Plowden report. That committee was set up unpolitically and impartially, and certainly without a Tribune group majority.
The Economist, on 18 December 1965, said:
Lord Plowden has given the idea of nationalising the aircraft industry, which has been bubbling on the tip of many Members' tongues, a sort of instant respectability.
Again, I hope that Conservative Members read The Economist, because it seems to know more about the aerospace industry than they do. I am not even quoting a politically-biased source. On 8 July 1967 The Economist said:
If the industry is going to be underwritten to this extent, then it must be in public ownership and answerable to public audit. In other words, nationalised.
If the Government will not accept that from us, let them accept it from The Economist which supports their point of view far more often than it supports ours.
Many of us believe that the Government have already taken the decision whereby British Leyland can be allowed to go to the wall. Many of us know that many Conservative Members believe that Britain's basic steel needs should be imported and not manufactured in this country. Many of us also believe that this Bill is designed to enable the British aerospace industry to go in the same direction. The Government shall not have this Bill. I invite my right hon. and hon. Friends to join me in the Lobby, both inside and outside the House, to ensure that the Bill shall not pass.

The Under-Secretary of State for Industry (Mr. Michael Marshall): The hon. Member for Nuneaton (Mr. Huck-field) has given another of his usual performances—carping and unconstructive criticism coupled with selective quotations. He relied heavily on The Economist, and I remind him that that publication said a few years ago that we should not build the Concorde. I know that there are some hon. Members who think that that was the right attitude, but I do not think that the hon. Member for Nuneaton is one of them. Today the hon. Member has had a difficult job in whipping up enthusiasm for opposition to this Bill. The tone was set in a much more balanced way by his right hon. Friend the Member for Deptford (Mr. Silkin). I shall deal with his speech in a moment. Before I do I shall pick up a couple of the wilder inaccuracies of the hon. Member for Nuneaton.
He went into a great dissertation about the way in which the Airbus would be endangered by the Bill. In doing so he totally ignored what my right hon. Friend the Secretary of State said in opening the debate. The hon. Member for Nuneaton should remember better than anyone that it was his right hon. Friend the Member for Bristol, South-East (Mr. Benn) who pulled us out of the Airbus project in 1968. Hawker Siddeley stayed in, risking private capital and thus maintaining a connection, without which we would not be members of the consortium today. These are the facts which the hon. Member skirted over.
I make it plain that we stand behind the airbus. The Bill in no way weakens the Government's support for participation in the airbus programme. The principles of co-operation which lie behind the memorandum of understanding will be maintained under the proposals before the House. It is also important to understand in that context that we believe that there will be greater opportunity in future in projects such as the airbus.
I turn to the point that was made by several hon. Members about the structure of British Aerospace and the question of foreign ownership. This question deserves serious consideration. It was raised by the right hon. Member for Deptford in opening the debate when he suggested that our intended provision to

limit foreign ownership to a maximum of 15 per cent. was in some way inadequate. On examination, his argument falls to pieces. He suggested that 15 per cent. was too high, but it is only right to remind him that if this is the case it is rather odd that the Labour Administration, in putting forward proposals for part II of the Industry Act 1975 saw no such limitation and envisaged 30, 40 or even 50 per cent. of foreign ownership as acceptable. If that is the case, why is 15 per cent. thought to be too high today?
Secondly, the right hon. Member for Deptford thought that the provisions would be evaded, for example through United Kingdom nominees or people acting in concert. Again, that ignores the fact that provisions restricting foreign ownership are a well-known feature of many companies such as Cable and Wireless and P & O. Several other British companies have found effective ways to deal with this part of their operations.
The articles of association of British Aerospace Limited, like those of other commercial companies, will allow directors to look behind and beyond nominee ownership. There is no question of United Kingdom nominees being used as a successful device to circumvent that provision. If the directors are suspicious about the real ownership of a share, they will be able to seek proof of British ownership. I have taken care in enunciating that point because it is important and the Government have given careful thought to it.
It has been suggested that the articles might be changed and that the Government would allow that to happen. However, as the Secretary of State made clear in his opening speech, the Government would not allow that to happen. That is the whole point of setting a minimum Government shareholding. It was also suggested that although a foreign shareholding could be controlled within the 15 per cent. maximum, there might be a possibility of influence being exerted. How can that be? The ability to influence a company can be achieved only through the appointment of directors. Should a foreign shareholder seek to elect a director, the Government would use their blocking mechanism.

Mr. Cryer: Is it not true that the Government have made such a hash of their


relations with the National Enterprise Board that the whole of that Board has resigned? The Government have shown that they are incompetent and the Secretary of State can give no guarantee that they are in control.

Mr. Marshall: I was being kind when I gave way to the hon. Gentleman. He came into the Chamber at 8.15 pm. He has not been following the debate, yet he immediately wants to go off at a tangent.
The remarks of the right hon. Member for Deptford do not stand up to examination. He cited four reasons for nationalisation.

Mr. John Silkin: The hon. Gentleman does not understand. I said that the Government could not afford to let such things happen. Therefore the Secretary of State's remark that the Government will not interfere in the management was absolute nonsense, and the hon. Gentleman has proved that.

Mr. Marshall: The right hon. Gentleman does not understand the difference between management and ownership. The owner, represented by the directors on the board, is within his right if he exerts his influence over the way in which the board maintains its stance. Clarification is available to the right hon. Gentleman, but perhaps he wishes merely to rehearse his prejudices.
The right hon. Gentleman said that nationalisation was needed as there had previously been a lack of success. However, that does not stand up to examination. Those companies that went into British Aerospace during 1975–76 made profits of £19 million and £29 million. The post-tax profits of British Aerospace were £29 million in 1977 and £28 million in 1978. Therefore, there is a continuing pattern.
The success of British Aerospace can be ascribed to the work of many of the private sector companies and their managers and work forces. The beauty of the measure before us is that it gives us a chance to revert to a healthier situation before it is too late.
The right hon. Gentleman also mentioned the ability to finance. Several hon. Members have mentioned that. Like

any other private company that operates under the Companies Act 1948 the company would have an opportunity to seek aid under the Civil Aviation Act 1949, under the Industry Act 1972 and also under the Science and Technology Act 1965, so in that sense it would be on all fours with other companies.
I turn to one or two of the contributions that we have heard from other parts of the House. I think that the whole House will recognise that we have heard some remarkable speeches from the Conservative Benches. We have heard speeches from my hon. Friends the Members for Welwyn and Hatfield (Mr. Murphy), for Hertford and Stevenage (Mr. Wells), for Preston, North (Mr. Atkins), and for Bristol, North-West (Mr. Colvin). All of them were discussing the industry in speeches based on their constituency experience; all of them, as has been pointed out, representing seats previously held by Labour Members; and all of them reflecting the way in which the Government have a mandate for the measure that we bring before the House tonight.
I turn to the speech of the hon. Member for Rochdale (Mr. Smith). From time to time I have said to him, through you, Mr. Speaker, that I believe that he talks a good deal of common sense on industrial matters. I have said that even when he has proposed to vote against us. I welcome the fact that he and his colleagues will be supporting us tonight.
I take the point that the hon. Member fairly raised on the question of employee shareholding. This is a matter to which the Government have given great consideration. We shall need to consult British Aerospace on the precise way in which this scheme will operate. Inevitably, that will take some time, but we intend to make our views on what we propose known quite clearly. We recognise that there must be some reasonable incentive to make the scheme attractive to employees. Like the hon. Member, we think that it has great significance, far beyond the measure before us tonight. The degree to which that shareholding will exist will affect our final decision on the total shareholding which the Government will seek to take. That is why we cannot be precise when we speak about a half shareholding.
I come now to one or two of the other specific questions on the way in which the investment decisions might be made. Again, we believe that these will be matters for British Aerospace, as a company operating independently. We have made it plain that the Government directors will be there to safeguard the shareholders' interest but not to interfere with commercial decisions. We have also made it plain that we shall continue the process of consultation.
I turn to what the hon. Member for Nuneaton was saying a few moments ago about a matter to which my hon. Friend the Member for Hertford and Stevenage also referred. It is, of course, the usual attempt to mislead the House to suggest that we have not sought, and, indeed, that we do not intend to continue having, consultations on these matters. We had consultations with the Confederation of Shipbuilding and Engineering Unions and with the Aerospace Staffs Liaison Committee in the period before the Bill was introduced, and we have made it plain that we intend to continue those consultations after the Second Reading, if the House so wills. In addition, my right hon. Friend the Secretary of State, my hon. Friend the Minister of State and I have had many opportunities in recent months to visit many of the plants of British Aerospace to discuss these problems and to meet representatives of the workforce and management. Therefore it is wrong to imply that in some way we are seeking to go over the heads of all concerned.
I turn to one other issue which the right hon. Member for Deptford raised—the defence commitment. This is a key issue. We regard it as the reason for the form of shareholding that we seek and, indeed, the form of director representation that we require. It is undoubtedly one of the reasons why we have seen the greater interest and involvement of a number of Governments in the aerospace industry. To that extent I agree with the hon. Member for Nuneaton. However, I remind him that when he cites the United States, it is still the fact that Boeing, the doyen that he mentions, is a private company.
I had the opportunity to visit Boeing recently. Whatever one may say about the way in which we would naturally seek to see our competition thriving

against Boeing, the fact is that it is a highly successful company even if one extrapolates that part of its business which gets benefit from research and development contracts through the National Aeronautics and Space Administration.
I would like to move on to one of the other aspects which is of particular importance in our thinking on this Bill. I refer to the whole question of stability. I am glad to find in various parts of the House, as I believe, recognition that we have reached a stage in the life of this Parliament, and in the life of our industry, when we must be willing to look at new forms and new ways of seeking a better relationship between Government, this House and industry. I believe that it was my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson)—who spoke with great experience having served in the industry—who made a telling point. Hon. Members must have been impressed by the way he told us very frankly of his experience of being in British Aerospace when it was nationalised. He spoke of the immediate problems and politicisation of that great industry. These were very telling comments.
I hope my hon. Friend will not find it embarrassing if I say that I found the speech of the hon. Member for Bristol, North-East who followed him, in equally constructive vein when he talked of the problems which come in changing organisation following nationalisation. He struck a chord in me because I was in the steel industry at the time of nationalisation and I have seen how ghastly an industry can be when it goes through a process of centralisation, decentralisation, and so on.
All hon. Members, when they speak of the way in which this Government should intervene, must recall that, day after day, and week after week, the Government are urged to intervene on many occasions for political reasons in. for example, the steel industry and the shipbuilding industry. Now, in the case of aerospace we see a profitable industry. If the industry should have a period in which life becomes more difficult, the whole business of State ownership presents an inevitable temptation for the Government of the day to intervene. I do not believe that that would be proper. The response has to be such as to allow


commercial management to make the best decisions in favour of all its work force rather than being pushed by hon. Members into precipitate or wrong action.
Stability is what we seek and the right hon. Member for Deptford in opening from the Opposition Front Bench—I noted his words carefully—could not really bring himself to say anything too unkind about the Bill. He called it pragmatic and ingenious. He praised my right hon. Friend's integrity. There was little which we could find to argue with him on that. The only thing he went on to say was that he feared that the Bill before the House was perhaps one which might be too acceptable to my hon. Friends. This was a theme taken up by a number of hon. Members, who seemed to regard it as in some way shocking that we should not make their life easy by coming forward with proposals for outright denationalisation, recognising as we do the problems of stability.
It is no part of our job to make the life of the Opposition easier but what was said from the Opposition Front Bench in opening was in direct contradiction with what was said when the hon. Member for Nuneaton came to reply on behalf of the Opposition. That is a situation with which we have to learn to live. In this area of opportunity which now faces British Aerospace there are a number of ways in which the House can help. There were speeches today from all sides of the House which recognised the big difference which, I believe, sets the aerospace industry apart from many of the nationalised industries we have discussed on many other occasions. The difference is that this is, above all, an internationally competitive manufacturing industry. It is one which requires the utmost speed in decision-making. It requires freedom of action to move untramelled by the kind of interventionism which has created much of the fear and many of the problems which have affected a large area of nationalised manufacturing industry in recent years.
In the Bill we have deliberately tried to keep the options open to the extent that we are giving hon. Members an opportunity to participate. I am glad to see the hon. Member for Westhoughton (Mr. Stott) present. He was clearly announcing his enthusiasm to join us in

Standing Committee and I am glad to feel that, with all his experience on the Aircraft and Shipbuilding Industries Bill, we shall have the benefit of his contributions. As my hon. Friend the Under-Secretary of State for Trade points out, the hon. Gentleman did not say very much on that occasion but we realise that there are certain reasons for that.
The Bill is to be related to the future memorandum and articles of association which will govern the activities of British Aerospace Limited. As the Committee proceedings develop, the Government will be interested to receive hon. Members' views. For that reason we have left areas of flexibility in relation to the total Government shareholding and the way that that shareholding will be used to block foreign ownership. We are seriously prepared to consider those matters. That is why I invited the right hon. Member for Deptford to consider the matter in that constructive way and not fall back on his natural prejudices.
I should like to return to a point made by my hon. Friend the Member for Ruislip-Northwood. In a powerful speech he gave the House the benefit of his experience of what it was like to be in British Aerospace at the time that it was nationalised. He went on to demolish the case of the right hon. Member for Deptford. With his interest in the record, I hope that the right hon. Gentleman will try to read what my hon. Friend had to say.
My hon. Friend the Member for Ruislip-Northwood was concerned about the degree to which the Government would seek to use the blocking mechanism in an attempt to prevent a foreign shareholder gaining effective control. He went on to raise the valid question whether that would present a restrictive attitude and one that might make it more difficult for us to take part in partnerships with other aircraft manufacturers.
The Government believe that the better way to proceed in that area is to look for opportunities to create new organisations, and do not, in a sense, see people buying their way into British Aerospace Limited. After all, that is the whole rationale for British Aerospace Limited, and it is in that sense that we see other opportunities.
The reason why I highlight the opportunities for that kind of partnership arrangement is that many hon. Members argued that in the past the British aerospace companies might have come together, but failed to recognise the way that the process has inevitably continued. It has become a natural feature. The question was asked whether the Government or British Aerospace could afford the cost of future developments, but it is precisely because of the high cost of the total civil aviation package that we now have more and more co-operative ventures.
Looking around the world, one finds that the major American aerospace companies are busy placing contracts in this country, which we are delighted to see. I believe that it can be said that there is now no one national capability to stand alone in the highly expensive field of aerospace manufacture. That is why the Government feel it right to seek opportunities to keep their options open.
The right hon. Member for Deptford referred to the question of the disposal of assets, as did the right hon. Member for

Battersea, North (Mr. Jay), and I accept that he makes a fair point. However, I remind him that under the Industry Act 1975 there are provisions—[Interruption.]—The hon. Member for Keighley (Mr. Cryer), who appears to be having a private conversation, joined us at 8.15. If he will be kind enought to allow me to reply to his right hon. Friend, I am sure that the whole House will appreciate it.

The disposal of assets is covered under part II of the Industry Act. However, we may well wish to consider the matter in Committee to see the precise way in which that kind of problem could be tackled. The Opposition have not, on any single occasion today, raised a point of real substance that could in any way undermine the validity of what we seek to do. The Bill is one which hon. Members in their hearts know to be a moderate, responsible and balanced way to achieve stability in the industry. I commend it to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 311, Noes 247.

Division No. 108
AYES
[10.00 pm


Adley, Robert
Buck, Antony
Fell, Anthony


Aitken, Jonathan
Budgen, Nick
Fenner, Mrs Peggy


Alexander, Richard
Bulmer, Esmond
Finsberg, Geoffrey


Alton, David
Burden, F. A.
Fisher, Sir Nigel


Amery, Rt Hon Julian
Butcher, John
Fletcher, Alexander (Edinburgh N)


Ancram, Michael
Cadbury, Jocelyn
Fletcher-Cooke, Charles


Aspinwall, Jack
Carlisle, John (Luton West)
Fookes, Miss Janet


Atkins, Robert (Preston North)
Carlisle, Kenneth (Lincoln)
Forman, Nigel


Atkinson, David (B'mouth, East)
Carlisle, Rt Hon Mark (Runcorn)
Fowler, Rt Hon Norman


Baker, Nicholas (North Dorset)
Chalker, Mrs. Lynda
Fox, Marcus


Banks, Robert
Channon, Paul
Fraser, Rt Hon H. (Stafford &amp; St)


Beaumont-Dark, Anthony
Chapman, Sydney
Fraser, Peter (South Angus)


Beith, A. J.
Churchill, W. S.
Fry, Peter


Bell, Ronald
Clark, Hon Alan (Plymouth, Sutton)
Galbraith, Hon T. G. D.


Bendall, Vivian
Clark, Dr William (Croydon South)
Gardiner, George (Reigate)


Benyon, Thomas (Abingdon)
Clarke, Kenneth (Rushcliffe)
Gardner, Edward (South Fylde)


Benyon, W. (Buckingham)
Cockeram, Eric
Garel-Jones, Tristan


Best, Keith
Colvin, Michael
Glyn, Dr Alan


Bevan, David Gilroy
Cope, John
Goodhart, Philip


Biffen, Rt Hon John
Corrie, John
Goodhew, Victor


Biggs-Davison, John
Costain, A. P.
Goodlad, Alastair


Blackburn, John
Cranborne, Viscount
Gorst, John


Body, Richard
Crouch, David
Gow, Ian


Bonsor, Sir Nicholas
Dickens, Geoffrey
Gower, Sir Raymond


Boscawen, Hon Robert
Dorrell, Stephen
Grant, Anthony (Harrow C)


Bottomley, Peter (Woolwich West)
Douglas-Hamilton, Lord James
Gray, Hamish


Bowden, Andrew
Dover, Denshore
Greenway, Harry


Boyson, Dr Rhodes
du Cann, Rt Hon Edward
Grieve, Percy


Bradford, Rev, R.
Dunn, Robert (Dartford)
Griffiths, Peter (Portsmouth N)


Braine, Sir Bernard
Durant, Tony
Grist, Ian


Bright, Graham
Dykes, Hugh
Grylls, Michael


Brinton, Tim
Eden, Rt Hon Sir John
Gummer, John Selwyn


Brittan, Leon
Edwards, Rt Hon N. (Pembroke)
Hamilton, Hon Archie (Eps'm&amp;Ew'll)


Brocklebank-Fowler, Christopher
Eggar, Timothy
Hamilton, Michael (Salisbury)


Brooke, Hon Peter
Elliott, Sir William
Hampson, Dr Keith


Brotherton, Michael
Emery, Peter
Hannam, John


Brown, Michael (Brigg &amp; Sc'thorpe)
Eyre, Reginald
Haselhurst, Alan


Browne, John (Winchester)
Fairbairn, Nicholas
Hastings, Stephen


Bruce-Gardyne, John
Fairgrieve, Russell
Havers, Rt Hon Sir Michael


Bryan, Sir Paul
Faith, Mrs Sheila
Hawkins, Paul


Buchanan-Smith, Hon Alick
Farr, John
Hawksley, Warren




Hayhoe, Barney
Mellor, David
Shepherd, Richard (Aldridge-Br'hills)


Heath, Rt Han Edward
Meyer, Sir Anthony
Shersby, Michael


Heddle, John
Miller, Hal (Bromsgrove &amp; Redditch)
Silvester, Fred


Henderson, Barry
Mills, Iain (Meriden)
Sims, Roger


Heseltine, Rt Hon Michael
Mills, Peter (West Cevon)
Skeet, T. H. H.


Hicks, Robert
Miscampbell, Norman
Smith, Cyril (Rochdale)


Higgins, Rt Hon Terence L.
Mitchell, David (Basingstoke)
Smith, Dudley (War. and Leam'ton)


Hill, James
Moate, Roger
Speller, Tony


Hogg, Hon Douglas (Grantham)
Molyneaux, James
Spence, John


Holland, Philip (Carlton)
Monro, Hector
Spicer, Jim (West Dorset)


Hooson, Tom
Montgomery, Fergus
Sproat, Iain


Hordern, Peter
Moore, John
Squire, Robin


Howe, Rt Hon Sir Geoffrey
Morgan, Geraint
Stanbrook, Ivor


Howell, Rt Hon David (Guildford)
Morris, Michael (Northampton, Sth)
Stanley, John


Howell, Ralph (North Norfolk)
Morrison, Hon Charles (Devizes)
Steel, Rt Hon David


Howells, Geraint
Morrison, Hon Peter (City of Chester)
Steen, Anthony


Hunt, David (Wirral)
Mudd, David
Stevens, Martin


Hunt, John (Ravensbourne)
Murphy, Christopher
Stewart, Ian (Hitchin)


Hurd, Hon Douglas
Myles, David
Stewart, John (East Renfrewshire)


Irving, Charies (Cheltenham)
Neale, Gerrard
Stokes, John


Jenkin, Rt Hon Patrick
Needham, Richard
Stradling Thomas, J.


Johnson Smith, Geoffrey
Nelson, Anthony
Tapsell, Peter


Johnston, Russell (Inverness)
Neubert, Michael
Taylor, Robert (Croydon NW)


Jopling, Rt Hon Michael
Newton, Tony
Tebbit, Norman


Joseph, Rt Hon Sir Keith
Nott, Rt Hon John
Temple-Morris, Peter


Kaberry, Sir Donald
Onslow, Cranley
Thomas, Rt Hon Peter (Hendon S)


Kellett-Bowman, Mrs Elaine
Oppenheim, Rt Hon Mrs Sally
Thompson, Donald


Kilfedder, James A.
Osborn, John
Thorne, Neil (Ilford South)


Kimball, Marcus
Page, Rt Hon R. Graham (Crosby)
Thornton, Malcolm


King, Rt Hon Tom
Parris, Matthew
Townend, John (Bridlington)


Knox, David
Patten, Christopher (Bath)
Townsend, Cyril D. (Bexleyheath)


Lamont, Norman
Patten, John (Oxford)
Trippier, David


Lang, Ian
Pattie, Geoffrey
Trotter, Neville


Langford-Holt, Sir John
Pawsey, James
van Straubenzee, W. R.


Latham, Michael
Percival, Sir Ian
Vaughan, Dr Gerard


Lawrence, Ivan
Peyton, Rt Hon John
Viggers, Peter


Lawson, Nigel
Pink, R. Bonner
Waddington, David


Lee, John
Pollock, Alexander
Wakeham, John


Lennox-Boyd, Hon Mark
Porter, George
Waldegrave, Hon William


Lester, Jim (Beeston)
Powell, Rt Hon J. Enoch (S Down)
Walker, Rt Hon Peter (Worcester)


Lewis, Kenneth (Rutland)
Prentice, Rt Hon Reg
Walker, Bill (Perth &amp; E Perthshire)


Lloyd, Peter (Fareham)
Price, David (Eastleigh)
Walker-Smith, Rt Hon Sir Derek


Loveridge, John
Prior, Rt Hon James
Wall, Patrick


Luce, Richard
Proctor, K. Harvey
Waller, Gary


Lyell, Nicholas
Pym, Rt Hon Francis
Walters, Dennis


McAdden, Sir Stephen
Rathbone, Tim
Ward, John


McCrindle, Robert
Rees, Peter (Dover and Deal)
Watson, John


Macfarlane, Neil
Rees-Davies, W. R.
Wells, John (Maidstone)


MacGregor, John
Renton, Tim
Wells, Bowen (Hert'rd &amp; Stev'nage)


MacKay, John (Argyll)
Rhodes James, Robert
Wheeler, John


Macmillan, Rt Hon M. (Farnham)
Ridsdale, Julian
Whitney, Raymond


McNair-Wilson, Michael (Newbury)
Rifkind, Malcolm
Wickenden, Keith


McNair-Wilson, Patrick (New Forest)
Rippon, Rt Hon Geoffrey
Wiggin, Jerry


McQuarrie, Albert
Roberts, Michael (Cardiff NW)
Wilkinson, John


Madel, David
Roberts, Wyn (Conway)
Williams, Delwyn (Montgomery)


Major, John
Ross, Stephen (Isle of Wight)
Winterton, Nicholas


Marland, Paul
Ross, Wm. (Londonderry)
Wolfson, Mark


Marlow, Tony
Rossi, Hugh
Young, Sir George (Acton)


Marshall, Michael (Arundel)
Rost, Peter
Younger, Rt Hon George


Mates, Michael
Royle, Sir Anthony



Maude, Rt Hon Angus
Sainsbury, Hon Timothy



Mawby, Ray
Scott, Nicholas
TELLERS FOR THE AYES:


Mawhinney, Dr Brian
Shelton, William (Streatham)
Mr. Spencer Le Marchant and


Maxwell-Hyslop, Robin
Shepherd, Colin (Hereford)
Mr. Anthony Berry.


Mayhew, Patrick






NOES


Adams, Allen
Bradley, Tom
Coleman, Donald


Allaun, Frank
Bray, Dr Jeremy
Concannon, Rt Hon J. D.


Anderson, Donald
Brown, Hugh D. (Provan)
Conlan, Bernard


Archer, Rt Hon Peter
Brown, Robert C. (Newcastle W)
Cook, Robin F.


Armstrong, Rt Hon Ernest
Buchan, Norman
Cowans, Harry


Ashley, Rt Hon Jack
Callaghan, Rt Hon. J. (Cardiff SE)
Cox, Tom (Wandsworth, Tooting)


Ashton, Joe
Callaghan, Jim (Middleton &amp; P)
Craigen, J. M. (Glasgow, Maryhill)


Atkinson, Norman (H'gey, Tott'ham)
Campbell, Ian
Crowther, J. S.


Bagler, Gordon A. T.
Campbell-Savours, Dale
Cryer, Bob


Barnett, Guy (Greenwich)
Canavan, Dennis
Cunliffe, Lawrence


Barnett, Rt Hon Joel (Heywood)
Cant, R. B.
Cunningham, George (Islington S)


Benn, Rt Hon Anthony Wedgwood
Carmichael, Neil
Cunningham, Dr John (Whitehaven)


Bennett, Andrew (Stockport N)
Carter-Jones, Lewis
Dalyell, Tam


Bidwell, Sydney
Cartwright, John
Davidson, Arthur


Booth, Rt Hon Albert
Clark, Dr David (South Shields)
Davies, Rt Hon Denzil (Lianelli)


Boothroyd, Miss Betty
Cocks, Rt Hon Michael (Bristol S)
Davies, E. Hudson (Caerphilly)


Bottomley, Rt Hon Arthur (M'brough)
Cohen, Stanley
Davies, Ifor (Gower)







Davis, Clinton (Hackney Central)
Jones, Rt Hon Alec (Rhondda)
Roberts, Gwilym (Cannock)


Davis, Terry (B'rm'ham, Stechford)
Jones, Barry (East Flint)
Robertson, George


Deakins, Eric
Jones, Dan (Burnley)
Robinson, Geoffrey (Coventry NW)


Dean, Joseph (Leeds West)
Kaufman, Rt Hon Gerald
Rodgers, Rt Hon William


Dempsey, James
Kerr, Russell
Rooker, J. W.


Dewar, Donald
Kilroy-Silk, Robert
Ross, Ernest (Dundee West)


Dixon, Donald
Kinnock, Neil
Rowlands, Ted


Dobson, Frank
Lambie, David
Ryman, John


Dormand, Jack
Lamborn, Harry
Sandelson, Neville


Douglas, Dick
Lamond, James
Sever, John


Douglas-Mann, Bruce
Leadbitter, Ted
Sheerman, Barry


Dubs, Alfred
Leighton, Ronald
Sheldon, Rt Hon Robert (A'ton-u-L)


Duffy, A. E. P.
Lestor, Miss Joan (Eton &amp; Slough)
Shore, Rt Hon Peter (Step and Pop)


Dunn, James A. (Liverpool, Kirkdale)
Lewis, Ron (Carlisle)
Short, Mrs Renée


Dunnett, Jack
Litherland, Robert
Silkin, Rt Hon John (Deptford)


Dunwoody, Mrs. Gwyneth
Lofthouse, Geoffrey
Silkin, Rt Hon S. C. (Dulwich)


Eadle, Alex
Lyon, Alexander (York)
Silverman, Julius


Eastham, Ken
McCartney, Hugh
Skinner, Dennis


Edwards, Robert (Wolv SE)
McDonald, Dr Oonagh
Smith, Rt Hon J. (North Lanarkshire)


Ellis, Raymond (NE Derbyshire)
McElhone, Frank
Snape, Peter


Ellis, Tom (Wrexham)
McGuire, Michael (Ince)
Soley, Clive


English, Michael
McKay, Allen (Penistone)
Spearing, Nigel


Ennals, Rt Hon David
McKelvey, William
Spriggs, Leslie


Evans, Ioan (Aberdare)
MacKenzie, Rt Hon Gregor
Stallard, A. W.


Evans, John (Newton)
Maclennan, Robert
Stewart, Rt Hon Donald (W Isles)


Ewing, Harry
McMillan, Tom (Glasgow, Central)
Stott, Roger


Field, Frank
McNally, Thomas
Strang, Gavin


Fitch, Alan
McWilliam, John
Straw, Jack


Flannery, Martin
Magee, Bryan
Summerskill, Hon Dr Shirley


Fletcher, L. R. (Ilkeston)
Marks, Kenneth
Taylor, Mrs Ann (Bolton West)


Fletcher, Ted (Darlington)
Marshall, David (Gl'sgow, Shettlet'n)
Thomas, Dafydd (Merioneth)


Foot, Rt Hon Michael
Marshall, Dr Edmund (Goole)
Thomas, Jeffrey (Abertillery)


Ford, Ben
Marshall, Jim (Leicester South)
Thomas, Mike (Newcastle East)


Forrester, John
Martin, Michael (Gl'gow, Springb'rn)
Thomas, Dr Roger (Carmarthen)


Foster, Derek
Mason, Rt Hon Roy
Thorne, Stan (Preston South)


Foulkes, George
Maxton, John
Tilley, John


Fraser, John (Lambeth, Norwood)
Meacher, Michael
Torney, Tom


Freeson, Rt Hon Reginald
Mellish, Rt Hon Robert
Urwin, Rt Hon Tom


Garrett, John (Norwich S)
Mikardo, Ian
Varley, Rt Hon Eric G.


Garrett, W. E. (Wallsend)
Millan, Rt Hon Bruce
Wainwright, Edwin (Dearne Valley)


George, Bruce
Mitchell, Austin (Grimsby)
Walker, Rt Hon Harold (Doncaster)


Gilbert, Rt Hon Dr John
Mitchell, R. C. (Soton, Itchen)
Watkins, David


Ginsburg, David
Morris, Rt Hon Charles (Openshaw)
Weetch, Ken


Golding, John
Morris, Rt Hon John (Aberavon)
Wellbeloved, James


Gourlay, Harry
Morton, George
Welsh, Michael


Graham, Ted
Moyle, Rt Hon Roland
White, Frank R. (Bury &amp; Radcliffe)


Grant, George (Morpeth)
Newens, Stanley
White, James (Glasgow, Pollok)


Hamilton, W. W. (Central Fife)
Oakes, Rt Hon Gordon
Whitehead, Phillip


Harrison, Rt Hon Waller
Ogden, Eric
Whitlock, William


Hattersley, Rt Hon Roy
O'Halloran, Michael
Wigley, Dafydd


Haynes, Frank
O'Neill, Martin
Willey, Rt Hon Frederick


Heffer, Eric S.
Owen, Rt Hon Dr David
Williams, Rt Hon Alan (Swansea W)


Hogg, Norman (E Dunbartonshire)
Palmer, Arthur
Williams, Sir Thomas (Warrington)


Holland, Stuart (L'beth, Vauxhall)
Park, George
Wilson, Gordon (Dundee East)


Home Robertson, John
Parker, John
Wilson, Rt Hon Sir Harold (Huyton)


Homewood, William
Parry, Robert
Wilson, William (Coventry SE)


Hooley, Frank
Pendry, Tom
Winnick, David


Horam, John
Powell, Raymond (Ogmore)
Woodall, Alec


Howell, Rt Hon Denis (B'ham, Sm H)
Prescott, John
Woolmer, Kenneth


Huckfield, Les
Price, Christopher (Lewisham West)
Wrigglesworth, Ian


Hughes, Mark (Durham)
Race, Reg
Wright, Sheila


Hughes, Robert (Aberdeen North)
Radice, Giles
Young, David (Bolton East)


Hughes, Roy (Newport)
Rees, Rt Hon Merlyn (Leeds South)



Janner, Hon Greville
Richardson, Miss Jo
TELLERS FOR THE NOES:


Jay, Rt Hon Douglas
Roberts, Albert (Normanton)
Mr. James Tinn and


John, Brynmor
Roberts, Allan (Bootle)
Mr. James Hamilton.


Johnson, James (Hull West)
Roberts, Ernest (Hackney North)

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Charging Orders Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Cope.]

Orders of the Day — BRITISH AEROSPACE [MONEY]

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act of the present Session to provide for the vesting of all the property, rights, liabilities and obligations of British Aerospace in a company nominated by the Secretary of State and the subsequent dissolution of British Aerospace, it is expedient to authorise—

(a) the payment out of moneys provided by Parliament of any sums so payable under or in consequence of that Act; and
(b) the payment into the Consolidated Fund of any dividends or other sums required by that Act to be so paid.—[Mr. Cope.]

Orders of the Day — CHARGING ORDERS BILL [Lords]

As amended, considered

Mr. Deputy Speaker (Mr. Richard Crawshaw): The amendment standing in the name of the hon. Member for New-ham, South (Mr. Spearing) has not been selected. There are no amendments on consideration.

Bill read the Third time and passed, with amendments.

Orders of the Day — MANCHESTER AIRPORT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]

Mr. Fred Silvester: My hon. Friend the Under-Secretary of State has had a busy week. This seems to be aviation week. The previous debate, flying as fast as it did, kept up that tradition. However, I hope that my hon. Friend will find this a fairly relaxed moment. I hope that he will agree with much of what I have to say.
On Monday my hon. Friend said:
Manchester airport has an extremely important role to play in the United Kingdom's airport policy."—[Official Report 19 November 1979; Vol. 974, c. 8.]
I am glad that he recognises that. Tonight I want to stress that in two ways. First, I deal with Manchester airport's contribution to the growth of air traffic. It was decided last year that the airport would be the only category A international airport outside London. It is the third largest airport in the country outside Heathrow and Gatwick. Its importance is even greater if we ignore the question of domestic flights. I mean no disrespect to the other provincial airports when I say that that was an inevitable and right decision. It would have been foolish not to recognise the historic and geographic importance of the airport.
That decision was of great importance as it meant that we could plan the future of the airport on an established basis.
Currently the airport handles about 3 million passengers and 34,500 tonnes of freight. That is a small amount compared with the traffic handled by Heathrow and

Gatwick, which together handle about 30 million passengers and 500,000 tonnes of freight. Nevertheless, it is a substantial amount. Furthermore, a number of proposals exist for carefully staged improvements in the facilities at the airport. The strengthening of the runway continues in a most remarkable way every night. The proposals include an extension of the runway, for which a planning inquiry is either under way or is about to happen. There are many other planned improvements. There is a new cargo complex. There are additional facilities for aircraft parking stands.
The general facilities for the consumer, the airport traveller, are improving. There has been an improvement in catering and hotel facilities, and not least in car park facilities. It is a comfortable airport from which to fly—something which cannot always be said about airports. It is important to recognise that the city and county responsible for the airport have put a lot of time and effort into planning its future development. All the development can be funded out of revenue, and the airport will continue to grow as a thriving business without needing injections of Government money.
The net effect of all this is to increase the capacity of the airport to 7½ million passengers by 1990 without the building of the second runway. That would be a major contribution to the air traffic growth of the United Kingdom. It is not necessary always to see the problem of that growth in terms of "What are we going to do about London?"
I do not pretend that problems do not exist in London or that Manchester will solve those problems. If I were a London Member, I should be only too glad if Manchester could do away with the need for a third London airport. I doubt whether it will. Fortunately, that is not my problem. The Minister will have to grasp that thorny problem. However, Manchester increases the options open to the Government, both in terms of the cost of the developments there and the speed at which they take place.
It is estimated that 65 per cent. of domestic passengers out of Manchester connect with another airline. That is perhaps 500,000 into London. Allowing for taking off on a second plane and coming back again, we could be up to about 2 million passenger movements a year


avoided at Heathrow. I am aware that we cannot do the sums in that simplistic way, but those figures give some idea of the contribution that Manchester could make to easing the congestion around London.
However, I emphasise that the role of Manchester is not merely as an overflow for London. Its importance in its own right should be recognised. About 50 per cent. of the country's manufacturing industry is within a 75-mile radius of the airport. That is a statistic with which we have become familiar, but its implications are staggering.
The future economic health of the northern part of the country—Manchester affects not only the North-West, but the surrounding areas—is too often talked about in terms of grants, aid, saving a bit here and helping a bit there. We do not often have the opportunity to talk about something of major strategic importance such as Manchester airport.
A survey by the local chamber of commerce showed that the majority of experienced travellers request to go via Frankfurt or Amsterdam rather than suffer the hassle of Heathrow. That is an understandable view and is an indication of the opportunities and difficulties with which commerce is faced in that part of the world.
The Government can help. Manchester has a fine airport with great potential. It is economically important and it is prepared to seize opportunities in a proper commercial way, but it must not be hamstrung in its efforts by unreasonable restrictions. I refer particularly to licensing policy.
Two or three years ago, GEC started building 19 power stations in Saudi Arabia. Enough traffic was generated to sustain, according to Saudi Arabian Airlines, two flights a week from Manchester to Riad. Saudi Arabian Airlines made an application to the Civil Aviation Authority, but it was opposed by British Airways and was turned down. It seemed that that was a great opportunity missed. We are still convinced that the service would not only have been viable but would probably have grown.
Air Malta wanted to increase from four planes to five its services to Malta on a

joint route with British Airways. For a long time that development was thwarted because BA could not match the fifth plane. The system is now working, but there was a long delay.
There are scheduled international flights to 22 destinations out of Manchester involving a number of foreign airlines. This development must continue if the airport is to grow as we hope it will. West Africa, the Middle East and the American seaboard are obvious candidates for expansion.
I had some doubts about balancing the needs of British airlines with the freer skies policy I am talking about, but they were dispelled on Monday in the debate on the Civil Aviation Bill. Clause 10 of that Bill will impose duties on the CAA to look after the reasonable interests of the user and to look after the safety, efficiency and profitability of British Airways. The clause also stipulates the imposition of duties
'"to secure the most effective use of airports within the United Kingdom.
The authority will also have to ensure—and I paraphrase—that the new services do not upset the existing services of British airlines. They are not always the same thing, and, therefore, that balance will have to be stretched.
The CAA is being given new authority by the Secretary of State. It will have a greater discretion. It is right to say that it has been adopting a more flexible attitude in recent times. With that new discretion and with the new powers under the Act, that attitude must continue. It is of great importance to us.
I underline one point. Manchester international airport management is not against British Airways. It would like to see them running the services and I am not suggesting that British Airways should be cut out. The freer skies approach bites only when British Airways are not willing to run a service. In a sense, therefore, British Airways have a sort of permanent first refusal. It would, however, be bad for us, and for the whole of the North of England, if there was a regular veto on other services in order to protect the profitability of scheduled services out of London.
Yesterday the Secretary of State said:
There is, inherent in a sound policy for awarding routes, a strong element of tension".


—[Official Report, 19 November 1979; Vol. 974, c. 45.]
I accept that. But the tension is not only between airlines and their colourful bosses. It is also between the necessity to reconcile the needs of the airlines with a wider range of commercial interests in the area which they serve.
Manchester airport has made the necessary preparation to serve those interests. I am glad that my hon. Friend has agreed to come to the airport. Councillor Walsh, the chairman, and Mr. Sweetapple, the director, and the staff will, I am sure, give him a very good welcome. He will see at first hand the plans that have been made and the work that has been done. I emphasise that in asking the Minister to support the liberal and effective policy for new routes out of Manchester.
We are not asking for charity, nor are we asking for special treatment. We want the airport to have the facility to grow as consumer demand warrants. We are totally convinced that the airport can meet the need and we have growing evidence that the need exists in the surrounding area. I emphasise again that those of us who look for a resurgence of economic well-being in the North of England firmly believe that Manchester airport must be a central part of that future structure.

The Under-Secretary of State for Trade (Mr. Norman Tebbit): I have listened with interest to my hon. Friend the Member for Manchester, Withington (Mr. Silvester). I have carefully noted his remarks about the future role of Manchester airport. I am grateful to him for raising the issue. Manchester airport is not being debated in an Adjournment debate for the first time. We debated a slightly different aspect of its affairs, as my hon. Friend knows, as recently as 27 July. But my hon. Friend has illustrated the importance of Manchester not only to its immediate area but as a great regional airport, especially at this time when the Government are considering the question of a possible third major airport in the South-East of England.
My hon. Friend knows of, and has, to some extent, drawn upon a most interesting paper recently produced by the Manchester International Airport Authority

on its view of the long-term future of Manchester and the potential contribution of other major regional airports in helping to cope with the expected long-term increase of traffic in the London area. The Manchester airport authority kindly invited me to visit the airport to discuss this paper and to see for myself the facilities available. As my hon. Friend knows, I have written to accept the invitation and I hope to visit Manchester in the near future. I look forward to an exchange of views with the authority on the points raised in its paper.
I should, perhaps, pay my own tribute to Manchester International Airport Authority. I know from the times, not very long ago, when I operated into and out of Manchester that it has developed a first-class airport, serving much of the North of England. But, equally important, the authority has successfully sold its facilities to the airlines and the travelling public in general.
Despite the long-term growth in air transport, there are uncertainties about the return on investment in airport facilities. I should like to express my admiration to those in Manchester who had the courage and foresight to develop what is already one of the best airports in Europe. For many years, Manchester has handled more passengers than any other airport outside the London area. Traffic has grown from 2·3 million in 1974 to 3·4 million in 1978. That is an annual growth rate of 8·8 per cent., higher than in the London area. Its supremacy is even more marked when one considers only international passengers. Last year nearly 2½ million international passengers used Manchester compared to about 900,000 at Birmingham, the next largest airport in that sense.
However, as my hon. Friend knows—he has made the point himself—we must bear in mind that Heathrow handled nearly 23 million international passengers, some 10 times as many as Manchester. Recently the growth of traffic at Manchester has been well above the national average. I believe that part of that success has been due to the policy of giving the highest priority to the airport. Our objective is to shift the burden away from the London area and to encourage the development of services directly to the regions,


wherever possible. One way of achieving this is to concentrate traffic at a number of selected regional airports so that the additional traffic at these airports will increase the number of routes that would be viable and thus accelerate the growth of traffic in the region as a whole.
I have often had to say to those who try to beguile me with the attractions of other regional airports that it is essential to develop first what one would regard as the second great gateway that is Manchester before going on to develop other gateways to a comparable size in England. I emphasise "in England" not least because the right hon. Member for Lanarkshire, North (Mr. Smith) has been kind enough to come to listen to the debate.
Our predecessors attempted to formalise this policy in their 1978 White Paper on airports policy which classified airports into four categories. The Government are not bound in any way by our predecessors' White Paper. However, I should like to make it clear that we agree with the principle of categorisation as a means of concentrating regional traffic at a number of growth points. The Government do not intend to apply this policy rigidly, but I believe that in general it offers the best prospect for developing services in the regions.
Manchester is the only gateway international airport in England outside London, and it therefore has the highest priority of all regional airports in matters of licensing and development of services.
It is sometimes suggested that traffic could be further stimulated at regional airports such as Manchester if only the Government were to adopt a more liberal air traffic licensing policy. Let us look at the facts. I think that my hon. Friend understands the problem extremely well.
The range of international services operating from Manchester is greater than at any other airport outside of London. Scheduled services currently operate to 19 destinations in Europe and three in North America. Apart from Prestwick, no other regional airport serves transatlantic destinations.
The Government have negotiated rights from Manchester to a further five European countries, but these routes have not been taken up by the airlines. In addition,

there are a large number of other points in countries to which there are services which could also be served from Manchester. Altogether there are over 70 routes which could be operated from Manchester for which rights are available.
So there is no shortage of opportunities for airlines to develop new services from Manchester. The Civil Aviation Authority recognises the important role of Manchester in the allocation of licences, and the new powers which I hope will shortly be available under the Civil Aviation Bill will allow it to operate with greater discretion in deciding on the viability of services.
I should emphasise to my hon. Friend that the provisions concerning the duty of the CAA to consider the existing pattern of route services when considering new applications are designed not to discriminate against Manchester but to introduce an element of stability into its consideration of routes in a period when the guidelines and the guidance have been changed. We wanted to make it plain that we were not encouraging the CAA suddenly to indulge in a wholesale transfer of routes for no particular reason, other than that it thought that it might be a good idea at the time.
Only one application for an international licence from Manchester has been refused by the CAA, and in that case the airline offered no evidence to support the application. However, several of the licences which have been issued are not being operated. I want to make it clear that it is open to other airlines to apply for any licence, whether or not it is being operated.
I must assume that the real reason why licences are not being taken up or are not being operated is that the airlines do not yet consider that there is a sufficient demand to make them economically viable. We are encouraging freer competition in this respect, but the decision on whether to operate the services must remain one for the commercial judgment of the airlines.
Perhaps I may now turn briefly to the facilities available at Manchester airport; it is appropriate that I should mention them. There is the work on refurbishing the runway to enable the heavier


wide-bodied jets to use the airport. When the work is completed next year, Manchester will be able to handle an increasing range of long-haul routes, and no doubt this will prove an additional attraction to airlines. Key sector loan sanction was provided by the Government to enable this work to be carried out.
The airport authority has also applied for planning permission to extend the runway, and that is to be the subject of a public inquiry, so I think it best that I make no comments on its merits.
The authority has also sent me details of further proposed developments to increase the airport's capacity. Our policy is to support developments which are needed to cope with additional demand—subject, of course, to the usual planning procedures. But at a time of financial stringency I would not encourage any local authority airport operator to bring forward proposals for expansion which could not be justified on the basis of a reasonable forecast of increased traffic.
My hon. Friend was very realistic, as he always is, about the way in which airports such as Manchester could help to relieve the current pressure on London's airports. As he knows, the situation here is indeed serious, with Heathrow in all probability operating at its maximum capacity very shortly—perhaps entirely by 1982. That is why we were driven to transfer traffic to Gatwick. Of course, Manchester and other regional airports have a considerable role to play in alleviating the pressure on London airports.

Mr. Andrew F. Bennett: On the point of transfers from Gatwick to Heathrow, is the Minister aware that for most people who live north of Watford it is just as easy to get to Manchester international airport as it is to get to Gatwick? Is it not therefore logical to look at transfers to Manchester rather than to Gatwick?

Mr. Tebbit: I think that the hon. Gentleman has half a point but not a whole point, because a large part of the catchment area of Gatwick traffic will be on that side of London. Where there are services out of Manchester, and for someone who lives, as the hon. Gentleman

says, north of Watford, it may well be easier to go to Manchester rather than Gatwick. I hope that that will be a factor that will induce airlines to see whether they can bring forward viable services.
One of the issues on which the advisory committee on airports policy will shortly report to the Government is the extent to which that role can influence the need for a third London airport. We shall consider the role that regional airports can play in the solution of our airport capacity problems in the South-East. However, whatever we decide, I am sure that there is a great future for Manchester in building up its services to attract passengers from its natural catchment area, which may come down as far as Watford.
The Government's policy is to encourage the natural growth of traffic in the regions and thus alleviate the pressure on London's airports. I understand that the advisory committee on airports policy re-examined the assumptions previously made about the growth of air traffic in the region, so that its report will reflect more accurately the potential growth outside the South-East.
In conclusion, I believe that by its actions my Department has fully reflected its support for the development of Manchester airport. We have negotiated over 70 routes from Manchester to points in Europe, in addition to 17 in North America. So far the airlines have decided to operate on about 22 of those routes. Where there is dissatisfaction with an existing licence, either because it is not being used or because of the quality of the service, I assure the House that a competing airline may apply for that licence to be transferred to it.
The Civil Aviation Bill is intended to take this policy further by ensuring that licences are not refused solely because the Civil Aviation Authority has doubts about the viability of a route. That is a matter for judgment by the airlines. It will be for them to use their commercial judgment to decide whether to apply for licences in the knowledge that other operators will take advantage of the competitive situation to develop new routes. I believe that increasing competition will provide a healthy stimulus to the development of air services in the regions.
We have not stood in the way of improvements to facilities at Manchester. We have ensured that the authority has been able to obtain the finance for the refurbishing of the runway. As I have said, that will make it possible for the heavier jets to use the airport. The airport now has a capacity for 7½ million passengers a year, which should be sufficient to handle the expected growth in traffic for several years to come.
The future growth of Manchester airport will considerably alleviate the pressure on airports elsewhere. But I

would be misleading the House if I were to suggest that this welcome contribution is likely materially to affect the issue of whether additional airport capacity in the South-East will be needed and, if so, when. I am sure that Manchester, not least because of the great industrial area that surrounds it, will play an increasingly prominent part as the major English regional gateway airport. I wish it every success in doing so.

Question put and agreed to.

Adjourned accordingly at sixteen minutes to Eleven o'clock.

Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH RAILWAYS (No. 2) BILL

Lords amendments agreed to.

WEST MIDLANDS COUNTY COUNCIL BILL [Lords] (By Order)

Order read for resuming adjourned debate on Question proposed [28 June],

That the Bill be now considered.

Debate further adjourned till Monday 21 January at Seven o'clock.

TYNE AND WEAR BILL [Lords] (By Order)

Order for Second Reading read.

To be read a Second time upon 17 January.

Oral Answers to Questions — NORTHERN IRELAND

Security Forces (Co-operation)

Mr. Molyneaux: asked the Secretary of State for Northern Ireland whether he is satisfied with the level of co-operation between the security forces.

The Secretary of State for Northern Ireland (Mr. Humphrey Atkins): Co-operation between the security forces is good, but I am always looking for ways to improve it. That is the reason for the organisational changes that I announced in this area at the beginning of October.

Mr. Molyneaux: Is there not scope for improvement in the operational integration of elements of the security forces to provide greater flexibility in counterterrorist activity in local areas? Will the

Secretary of State seek to make greater use of local knowledge and experience?

Mr. Atkins: There is always scope for improving our reaction and the way we operate. That is what the security co-ordinator is charged with doing. I also take on board the point made by the hon. Gentleman about local knowledge being extremely important.

Rev. Ian Paisley: In view of the escalation in the number of murders of prison officers committed by the IRA, and the tragic killing on Monday of another prison officer, which was a carbon copy of a killing a few weeks ago in the same area, is the Secretary of State satisfied that the security co-operation is effective, since it seems that these killings in similar circumstances continue?

Mr. Atkins: As I said in my original answer, we are always trying to improve the co-operation and effectiveness of the security forces. As regards the second part of the hon. Gentleman's question, relating to a particular killing, there is a later question on the Order Paper about that and I ask him to await my answer to it.

Mr. Kilfedder: As the Secretary of State accepts that local knowledge is all-important, will he ensure greater deployment of the Ulster Defence Regiment, and allow it to work in co-operation with the Army whenever possible?

Mr. Atkins: Yes, Sir. The precise deployment of units of the Ulster Defence Regiment is a matter for the GOC. However, I entirely agree with the hon. Gentleman that we need to make as much use as we can of that regiment's special skills and knowledge. I have discussed this with the GOC on many occasions and I shall continue to do so.

Constitutional Conference

Mr. Parry: asked the Secretary of State for Northern Ireland which parties have now indicated to him that they intend to participate in the conference on Northern Ireland; and if he will make a statement.

Mr. Marlow: asked the Secretary of State for Northern Ireland whether he is satisfied with the progress of all-party talks in Northern Ireland; and what action he now proposes in the matter.

Mr. Stanbrook: asked the Secretary of State for Northern Ireland if he will make a statement about the proposed conference on the constitutional future of Northern Ireland.

Mr Peter Robinson: asked the Secretary of State for Northern Ireland what progress has been made with the discussion of his consultation document; and what response he has had from Northern Ireland political parties and other interested groups.

Mr. Flannery: asked the Secretary of State for Northern Ireland what is the latest situation regarding acceptances and rejections for attendance at the expected conference on Northern Ireland and if he will make a statement.

Mr. Latham: asked the Secretary of State for Northern Ireland whether he will make a further statement on his proposed constitutional discussions with political parties in the Province.

Mr. Biggs-Davison: asked the Secretary of State for Northern Ireland if he will make a statement on his conference with political parties.

Mr. Humphrey Atkins: I have recently had further contacts with the leaders of the four main political parties in Northern Ireland. The leaders of the Democratic Unionist Party, the Social Democratic and Labour Party and the Alliance Party have now indicated their readiness to attend the conference. Its purpose will be to consider how powers of government could be transferred to locally elected representatives in Northern Ireland on a basis that is acceptable to both sides of the community there. I have now written to the three party leaders informing them that the conference will begin on Monday 7January at Parliament Buildings, Belfast. I have also written similarly to the leader of the Ulster Unionist Party, the hon. Member for Antrim, South (Mr. Molyneaux) in the hope that, before the conference opens, his party will, after all, decide to attend.
I do not underestimate the task that faces the conference. But there is a general desire in the Province for progress. We must now turn it to good account.

Several hon. Members: rose—

Mr. Speaker: Order. I propose to call first those hon. Members whose questions are being answered.

Mr. Parry: I thank the Secretary of State for that reply. I am sure that many hon. Members will welcome the attendance of the Social Democratic and Labour Party at the conference. It was consistently advocated by my hon. Friend the Member for Belfast, West (Mr. Fitt). Will the Secretary of State agree that, sooner or later, the whole question of the Irish dimension must be discussed?

Mr. Atkins: Yes. As I indicated to the House on 29 November, the Irish dimension, which is a phrase which means exactly what one wants it to mean, has a part to play. The relationship between any elected body which is in control of the affairs of Northern Ireland and the authorities in the Republic of Ireland will be a matter for that body to decide. There are a great many areas in which co-operation between the North and South is extremely important. We all want to develop those.

Mr. Marlow: Does the Secretary of State agree that enshrining minority rights in any new constitutional arrangement for Northern Ireland will perpetuate the divisions between the communities? Would it not be far more positive for Northern Ireland to be entirely integrated within the United Kingdom, with a system of county councils similar to that in England? Does he agree that, in that way, people would get together and there would be a process of gradual assimilation?

Mr. Atkins: One of the purposes of the conference will be to discuss and seek agreement on points such as those my hon. Friend makes. There are a variety of ways in which we can do what the Government are determined to try to do—to transfer to locally elected representatives responsibility for affairs in the Province. My hon. Friend has suggested one particular way forward. Other people have other ways. That is what the conference will be all about.

Mr. Stanbrook: Is my right hon. Friend aware that it is not possible for the British Government to stand back and wait for an agreement reached


around the conference table by the parties concerned? Is it not true that sooner or later the British Government must take a part in these negotiations and produce proposals to this Parliament?

Mr. Atkins: Yes, I hope that I have made that clear. The responsibility ultimately is for the Government to decide what to suggest to Parliament and bring those proposals to Parliament, and then for Parliament to decide whether to let them go forward. This stage in the proceedings is simply an attempt to get representatives of the people of Northern Ireland together around a discussion table to see what level of agreement we can find. If we can find a reasonably high level of agreement, the House would wish to know this when it decides what to do.

Mr. Robinson: Is the Secretary of State aware that there is a certain amount of confusion about the scope of the conference? Will he confirm the remarks that he made to my hon. Friend the Member for Antrim, North (Rev. Ian Paisley), to the effect that the agenda and consultative document are still unchanged? Will he outline what action he will take if the taboo subjects outlined in paragraph 4 of the document are raised?

Mr. Atkins: Yes. It is quite clear that the working paper, Cmnd. 7763, which the House debated on 29 November, is the basis for the conference. In my speech on that day I made it clear to all parties that they would be free to put forward papers containing their own proposals. I have gone one stage further, and I have said that I shall invite those parties to introduce those papers orally at the conference. But, as is made clear in paragraph 4 of the White Paper, I shall not invite the conference to discuss a certain range of subjects.

Mr. Flannery: Will the Minister agree that the polarisation of the voting in the two general elections was an indication of the developing intensity of the struggle in Northern Ireland, as evidenced by the recent increase in bombing? Does he not agree that the time has come for all sides to talk? Would it not be much better, now that the SDLP has agreed to come to the conference, for the Official Unionists to do the same? Is he aware that it

will not be a proper conference, with any real hope, unless the Official Unionists see it in that way? I am convinced that the ordinary supporters of the Official Unionists want them to attend.

Mr. Atkins: Of course I hope that the four parties will come and discuss ways of making progress. I think that the hon. Gentleman is wrong to link that with the level of violence in Northern Ireland. Un-happily, the situation in the Province at present is that the Provisional IRA has no interest whatever in political developments. In fact, I do not believe that it wants to see any political development. Its only concern is to seek to destroy democratic institutions, both in the North and South, as it has said. Therefore, while I am sure that it is the wish of people in the Province that we should make political progress, we must not be under any illusion that this will reduce the level of violence. I am afraid that it will not.

Mr. Latham: If the Official Unionists do not come to the conference, will not the actual result be, whether desirable or not, that, both on this side of the water and possibly on the other side as well, people will regard the party led by the hon. Member for Antrim, North (Rev. Ian Paisley, as speaking for the vast majority?

Mr. Atkins: I do not think that that is for me to say. I hope very much that the four main parties will come to the conference. We are seeking agreement among the political parties on how to progress. It is not only the Government who need to know this, but the House as well. In the end, the House will make the decisions. We all want to make decisions for the future of Northern Ireland which we believe will be acceptable to the people and have a chance of lasting. Therefore, the greater the level of agreement we can get, the better.

Mr. Biggs-Davison: Will the Secretary of State clarify the phrase "Irish dimension"? Has there not always been, and must there not always be, business-like cross-border co-operation? To remove false hopes on one side and dangerous fears on the other, will my right hon. Friend make clear that his interpretation of the phrase "Irish dimension" does not affect the sovereignty of the United Kingdom of Great Britain and Northern Ireland?

Mr. Atkins: I readily make that point clear. The difficulty about the phrase "Irish dimension" is that it seems to me to mean exactly what one wants it to mean. It is quite clear that there are a number of matters of common interest to people who live in Ireland, whether it be north or south of the border, and there are matters which are discussed between the North and South at present which will continue to be discussed in future. We must avoid the temptation to put ourselves in the position of saying that we either can or cannot discuss the Irish dimension. It is there; it is a fact of life, or at least a fact of geography. Of course it will be discussed, but in the end the progress that is made in the political field depends on the will of Parliament.

Mr. John: So that this House may be absolutely clear about the answer of the Secretary of State to the hon. Member for Belfast, East (Mr. Robinson), are we to understand that what was agreed in the exchange of letters was that the subject of Irish unity may be raised in a memorandum, but will not be discussed at the conference? Or will there be a discussion as well as the introduction of the memorandum? Have the Government ruled out any sort of association of other elected representatives in the Province with these talks?

Mr. Atkins: On the question of Irish unity, I repeat what I said before. In the first place, I have invited any party attending the conference or any other party or individual to submit to the conference whatever proposals they please, without any limit. Secondly, when the conference meets I shall invite the parties to introduce their papers orally. Thirdly, I shall not invite the conference to discuss the matters set out in paragraph 4 of the White Paper which include Irish unity. Equally, when dealing with paragraph 5, I shall not invite the conference to discuss the control of security. The Government are not prepared to recommend to the House that that should be transferred.
That is the limit of my remarks. I do not think that there is anything more that I can usefully say. There are those who have aspirations about Irish unity, for example, and that is all right. It is what the conference discusses that matters, because the whole purpose of the conference

is to seek to make an advance, even if it is a comparatively limited one. We should be wrong to spend time discussing a range of subjects on which we know perfectly well there will be no agreement.
Political parties or individuals not represented at the conference will be invited to submit their views in writing. In a recent debate it was suggested that there should be an arrangement by which I could, at the same time, consult the House. I am ready to do that and to consider means of doing it effectively.

Mr. Kilfedder: Does the Secretary of State not yet realise that the Official Unionist Party is as much opposed as the Provisional IRA—but for different reasons—to the creation or re-creation of a devolved Stormont Parliament? So that the Ulster people have full representation at the conference, will he invite all Ulster Members of Parliament who are willing to attend, so that there can be full and proper discussions on the future of Ulster?

Mr. Atkins: It is right to confine the conference to the four main political parties, although I am ready to seek ways of taking into account the views, on a continuing basis, of other hon. Members. I do not think that the hon. Gentleman should expect me to answer for anything other than Her Majesty's Government.

Mr. Fitt: Is the Secretary of State aware that there is still much confusion and controversy about what can and what cannot be discussed at the conference? Will he tell the House, now, whether paragraph 4 lays down the broad parameters of discussion? Will he tell the House what would happen if one of the parties at the conference were to put forward proposals that contravened paragraph 4? Would the Secretary of State rule any discussion of such proposals out of order?

Mr. Atkins: Paragraphs 4 and 5 of the White Paper set the limits of the discussions that I am prepared to invite the conference to follow. Any party is able to put forward any ideas in writing. The parties at the conference will be invited by me, as the chairman, to introduce their papers orally.

Terrorism

Mr. Wm. Ross: asked the Secretary of State for Northern Ireland whether he


now plans to introduce new measures to combat terrorism in Northern Ireland.

Mr. Humphrey Atkins: As I stated in the House on 11 December, there have already been a number of important developments, including new measures to enhance cross-border security, a large increase in the establishment of the RUC, and a programme of re-equipment for the police. There have also been other measures of a more specifically operational nature, on which the House will not expect me to go into detail.

Mr. Ross: Is the Secretary of State aware that since he took office there has been a considerable increase in the number of people murdered as compared with the corresponding period last year, culminating in seven murders last weekend? Will he agree that the measures that he has taken hitherto have not been successful? Will he take more effective measures to defeat the IRA?

Mr. Atkins: The House debated that issue a week ago. At that time I explained the actions of the Government. The hon. Gentleman put forward his point of view, as did many other hon. Members. The continuance of the emergency powers and the way that the Government should operate them, were approved on a Division at the end of the debate.

Mr. Latham: Does my right hon. Friend have anything to tell the House about cross-border security arrangements following the change of Prime Minister in the Republic?

Mr. Atkins: There is a later question on the Order Paper relating to that, and I ask my hon. Friend to await my answer.

Mr. McCusker: Is the Secretary of State aware that reports in the press this morning indicated that the army of the Republic of Ireland has acquired anti-aircraft guided missiles to combat aerial attacks by the IRA? If that is a real threat in the Irish Republic, will the Secretary of State tell the House whether it has been discussed at the cross-border security meetings? If it has been discussed, will he assure the House that the army in Northern Ireland has similar weapons available, and, more important, has authority to use them if necessary?

Mr. Atkins: Over many years I have learnt not to believe everything that I read in the newspapers.

Rev. Ian Paisley: As the IRA is now carrying out attacks in areas hitherto not attacked, is the Secretary of State satisfied that his arrangements are really counteracting IRA terrorism?

Mr. Atkins: The Government's arrangements for controlling the activities of the IRA can never be said to be operating wholly satisfactorily as long as the IRA is able to launch attacks on innocent individuals, members of the security forces and business premises. I am continually seeking ways of improving our actions in dealing with the IRA.

Mr. John: May I ask the Secretary of State questions on three matters of anxiety arising from recent incidents. First, if the Army is to use deserted farm houses as observation points, should it not have some means of guarding against intruders gaining access and mining the farmhouses, as occurred last weekend? Secondly, as new units seem to be singled out for attack fairly early in their tour, is he satisfied with the training for the new units? Thirdly, as motorised patrols are singled out for attack, will he consider pressing for more helicopters to be made available for operations in Northern Ireland, both independently and in conjunction with the motorised patrols?

Mr. Atkins: The detailed implementation of security policy is left to the commanders of the security forces. The circumstances vary in each case. Nevertheless, I shall ensure that the hon. Gentleman's remarks are brought to the attention of the GOC and the Chief Constable.
New army units arriving in the Province are given intensive and elaborate training and preparation for the circumstances that they might face on arrival. I do not know how much more we can do, although I am ready to discuss that with the GOC. There is no conclusive evidence that new units are being attacked rather than other units, but I shall consider that.
I have a great deal of sympathy with the hon. Gentleman's remarks about the use of helicopters. The helicopter is a valuable weapon in our armoury against the terrorist. It is not an exclusive weapon and we must maintain the rest of our


activities against the terrorists. I am studying the deployment and use of helicopters because they are useful weapons against the enemy.

Building Regulations

Mr. Chapman: asked the Secretary of State for Northern Ireland if he is satisfied with the content, administration and interpretation at local level of the Building Regulations (Northern Ireland) Orders 1972 and 1978.

The Minister of State, Northern Ireland Office (Mr. Hugh Rossi): The building regulations in Northern Ireland operate in a generally satisfactory manner but we are constantly looking at means of simplifying and streamlining their content and administration.

Mr. Chapman: When my right hon. Friend the Secretary of State next considers amendments to the Northern Ireland building regulations, will he consider whether they can be simplified without in any way compromising safety, as many people consider possible? If he thinks that there is merit in the building regulations being uniform throughout the United Kingdom, instead of having the present four different sets, is he prepared to consult his right hon. Friends the Secretaries of State for Scotland, Wales and the Environment to consider whether that can be brought about?

Mr. Rossi: I am aware of the review recently announced by my right hon. Friend the Secretary of State for the Environment. I intend to study his conclusions carefully to ascertain whether they may be applied to Northern Ireland.

Mr. Pendry: Will the Minister accept that if he finds a way of meeting the wishes of the hon. Member for Chipping Barnet (Mr. Chapman) by simplifying the building regulations without weakening safety requirements, he will receive the Opposition's full support? Will he take this opportunity of congratulating the six building control officers in Northern Ireland who, by their efforts, have made the interpretation of regulations that much easier to understand in Northern Ireland?

Mr. Rossi: I do so most readily.

Extradition

Mr. Bradford: asked the Secretary of State for Northern Ireland if he will pursue the issue of extradition with the Government of the Republic of Ireland as one of the methods of improving security in Northern Ireland.

Mr. Humphrey Atkins: We are determined that those who commit terrorist crimes in Northern Ireland and then flee to the Republic should be brought to justice. Since extradition procedures have proved ineffective in such cases, for reasons that I explained to the House on 25 October, I have agreed with Irish Ministers that it is important to make greater use of the extra-territorial legislation in both countries.

Mr. Bradford: Is the Secretary of State aware that the extra-territorial jurisdiction legislation is of no use in dealing with border security? Will he press the new Taoiseach to treat extradition seriously? Does he accept that few Southern politicians believe that the opposition to extradition can be upheld on the basis of a constitutional argument?

Mr. Atkins: I take note of the hon. Gentleman's remark about the attitude of Southern politicians. Her Majesty's Government have made it clear to the Government of the Republic, and will do so again, that in their view extradition is the best answer. We operate it and we hope that they will do the same.

Rev. Ian Paisley: Does the right hon. Gentleman agree that the extra-territorial jurisdiction legislation is a sorry remnant of the ill-fated Sunningdale agreement? Will he consider extradition with a view to ensuring that those who commit crimes in Northern Ireland are brought to Northern Ireland, placed before the courts, and sentenced?

Mr. Atkins: The hon. Gentleman refers to the extra-territorial legislation as a sorry remnant. That is a reference to something that has gone by. I remind him that the Government of the Republic have recently signed the European convention on the suppression of terrorism. That does not take us very far forward, because the convention is much the same as the extra-territorial legislation. However, I suggest that that act on the part of


the Republic should be regarded as evidence that the Government of the Republic will use the extra-territorial legislation.

Mr. Fitt: Does the right hon. Gentleman agree that the extra-territorial legislation was freely entered into by the British Government and the Government of the Irish Republic, who are failing to implement that legislation? Is it not a fact that the security forces in Northern Ireland have not attempted to get the legislation implemented, and that, without their co-operation, or their requests for its use, it is impossible for the Government of the Republic of Ireland to take any action?

Mr. Atkins: It is largely a matter of evidence. Since 1971–75 arrest warrants for persons suspected of terrorist offences have been sent to the Republic. It is not always easy to obtain the necessary evidence. It is not a lack of will on the part of the authorities in the United Kingdom that prevents the legislation being used. Requests are currently being considered.

Mr. Stanbrook: Is my right hon. Friend aware that he is incorrect in saying that the Republic has signed the European convention on the suppression of terrorism? Is it not a fact that, at the end of the Dublin summit, a protocol was signed which had the effect of applying the extra-territorial legislation to the Republic and to the members of the Community? It added nothing to relations between the United Kingdom and the Republic. Is it not the case that no improvement can be made until the Republic accedes to the convention?

Mr. Atkins: My understanding is that the Government of the Republic have signed an agreement on the application of the European convention on the suppression of terrorism. I understand that that agreement does not come into force until three months after all member States have ratified it. I do not think that they have done that yet, so I cannot say when it will start.

Mr. John: What practical effect will the signing of a protocol have?

Mr. Atkins: Not very much. It merely confirms the arrangements that the Republic entered into with us over the extra-

territorial legislation. I mentioned that the Government of the Republic signed and agreed the document because the hon. Member for Antrim, North (Rev. Ian Paisley) indicated that the extra-territorial legislation was—he did not say that it was a dead duck, but that is what he meant—ahangover from something that he did not like very much. I suggest that the evidence that the Government of the Republic have recently signed an agreement is an indication that they will do that which the discussions that we have had with them indicate they wish to do.

Irish Republic (Collaboration)

Mr. J. Enoch Powell: asked the Secretary of State for Northern Ireland to what extent he expects that the arrangements made with the Irish Re-public during the last five months for mutual collaboration against terrorism will be affected by the recent change of Government in that country.

Mr. Humphrey Atkins: The new Taoiseach has made quite clear his un- equivocal condemnation of the Provisional IRA and all its activities, and has said that the security arrangements which are in existence will be maintained. I am, therefore, confident that our co-operation in the fight against our common enemy will continue unabated.

Mr. Powell: What quid pro quo did Her Majesty's Government offer to the Government of the Republic in return for an arrangement on the part of the Republic which proved to be politically sensitive and difficult?

Mr. Atkins: None, Sir.

Mr. Biggs-Davison: Despite what may or may not have happened 10 years ago, is not the new Taoiseach a man who may be expected, having a keen sense of the interests of his country, vigorously to prosecute the campaign against the common enemy?

Mr. Atkins: I do not have the pleasure of knowing the new Taoiseach. Therefore, the original answer that I gave to the right hon. Member for Down, South (Mr. Powell) was based on what the Taoiseach has said since assuming office.

Mr. Flannery: Does the right hon. Gentleman agree that, even if collaboration were engaged in to perfection, its


impact on the situation in Northern Ireland would be minimal? In reality it is a political problem; it is not merely a problem of terrorism. Does he agree that, no matter how much we improve security, the underlying political reasons for the struggle are still present, and that the Official Unionists should come to the conference to try to solve them?

Mr. Atkins: The hon. Gentleman is slightly out of date. The Provisional IRA has made it clear, in published statements, that its prime aim is, first, to overthrow the Government of Northern Ireland and, having done that, to overthrow the Government of the South. In both cases its intention is to use force and not democratic means. There is no political advance that can meet that ambition. As I have said, I am certain that it is right that we should make a political advance, but I do not think that it will have any effect on the Provisional IRA.

Rev. Ian Paisley: How can the right hon. Gentleman be so dogmatic that the new Premier of the Republic will help him in his fight against the common enemy when the Leader of the Opposition in the Dail said that for nine years the same gentleman never opened his mouth to utter one word of condemnation of the Irish Republican Army?

Mr. Atkins: The Leader of the Opposition in this place is occasionally rude about my right hon. Friend the Prime Minister. However, I know that she will do what she says she will do.

Mr. John: Should it not be a rule of the House that we await the actions of new Prime Ministers before commenting upon them, rather than condemn them in advance? Will not the Taoiseach be judged by the way in which he discharges the duties or sentiments that he has already expressed in response to the killings of last weekend?

Mr. Atkins: The hon. Gentleman is absolutely right. I think that we are entitled to take some encouragement from his published statements to the effect that the arrangements entered into by his predecessors with us will stand.

Mr. Wm. Ross: When the Secretary of State was last in Dublin did he raise with the Government there the question of the large number of people from Nor-

thern Ireland now resident in the Republic whom the RUC wishes to interview in connection with terrorist crimes? Will the right hon. Gentleman tell the House the number of such persons?

Mr. Atkins: I cannot give the figure without notice. In my discussions with Ministers of the Republic I have raised these matters.

Parole

Mr. Cryer: asked the Secretary of State for Northern Ireland what criteria are adopted when releasing prisoners on parole.

The Minister of State, Northern Ireland Office (Mr. Michael Alison): Northern Ireland does not have a parole scheme on the model of Great Britain. Prisoners, other than those serving very short terms, may be granted short periods of home leave near the end of their sentences. This is normally granted to those applying for it unless, because of a prisoner's behaviour in custody, it appears that it should be withheld in the public interest.

Mr. Cryer: Will the Minister get together with the Home Secretary to ensure that, when the Northern Ireland authorities grant home leave to prisoners near the end of a sentence, those prisoners are not arrested and detained in prison when they reach Great Britain, without experiencing home leave, and sent straight back to the prison from which they have come? This is grossly unfair, entirely unjust and should be brought to an end. Will the hon. Gentleman have discussions with the Home Secretary about the matter?

Mr. Alison: I am aware of the case to which the hon. Member for Keighley (Mr.Cryer) is referring. The prison from which the prisoner in question was released for home leave did inform the West Yorkshire police that he was going home. The hon. Gentleman will understand that, even then, there can be no certainty that the chief officer of police in West Yorkshire can himself decide what action to take without looking at a particular case and interviewing the prisoner himself. It was, however, a case without precedent. We are seeking, in collaboration with the Home Office, to see whether this kind of incident can be avoided in the future.

Security

Dr. Mawhinney: asked the Secretary of State for Northern Ireland if he will make a statement on the security of the Province.

Mr. McCusker: asked the Secretary of State for Northern Ireland if he will make a statement on the security situation in Northern Ireland.

Mr. Humphrey Atkins: I gave the House a full analysis of the security situation in Northern Ireland during last week's debate on the order renewing the Emergency Provisions Act. Since I last answered questions on 22 November, nine people have died as a result of terrorist action, one of them a civilian, five of them members of the security forces, and three of them members of the prison service. Last Sunday, 16 December, brought home to us all once again the ruthless, callous and mindless nature of Provisional IRA terrorism when five soldiers of the Regular Army and an innocent civilian, retired from the Ulster Defence Regiment, were murdered in Dungannon, Forkill and Omagh. There was a series of co-ordinated car bomb and incendiary attacks on 26 November in which 10 people were injured and damage caused in a number of towns.
On 5 December, and again yesterday, car bombs caused damage in London-derry as did an attack in Lisburn on 6 December. The RUC and the army have continued with their intensive operations to counter terrorist activity and to bring those responsible to justice. Twelve of the incendiary devices used on 26 November were neutralised by the security forces, but for which the casualties and damage caused would have been a good deal more severe.
Since 22 November, 60 charges have been brought for terrorist offences, including four for murder and five for attempted murder. Three of them relate to the murder of a prison wages clerk in Belfast on 7 November. In addition, 19 weapons and 4,755 rounds of ammunition have been found.
The RUC also played its part, along with other police forces, in the events leading up to the arrest of a number of people

in Great Britain recently, and the charging of nine of them with terrorist offences the day before yesterday. While they do not tell the whole story, these figures illustrate the degree of effort which the security forces, with the full backing of the Government, are continuing to make in the fight against terrorism.

Dr. Mawhinney: I thank my right hon. Friend for the answer, the first part of which will have saddened the House. Bearing in mind the time of year and the fact that most, if not all, our soldiers in Northern Ireland will be separated from their families next week, will my right hon. Friend agree, on behalf of the House, to convey to the commanding officers of all the regiments in Northern Ireland and to the Chief Constable of the RUC the deep gratitude of this House and the British people for the magnificent job they have done during this year?

Hon. Members: Hear, hear.

Mr. Atkins: I shall do that most willingly. I shall also record the enthusiasm with which my hon. Friend's suggestion was received by the House.

Mr. McCusker: Do not the statistics of death and destruction that the Secretary of State has given show that the security situation is deteriorating? As we end this decade of terror and violence in Northern Ireland, what words of encouragement can the Secretary of State give to the people of Northern Ireland that they will not have to endure another 10 years of this activity?

Mr. Atkins: The figures that I have given are, of course, deplorable. I hope, however, that the hon. Gentleman heard the figures for the successes of the security forces. There is no doubt that those whose business it is to defend us are becoming all the time more skilled and effective. I hope very much, and I believe, that as the years progress and as people in Northern Ireland can agree more and more with each other about how they want that part of the United Kingdom to develop, the terrorists will find there is no place for them in Northern Ireland, that there is no haven for them and that their activities will be circumscribed to such a point that they will not trouble us in the way that they have done.

HELSINKI FINAL ACT

Ql. Mr. Soley: asked the Prime Minister if she is satisfied with the progress made by all parties in implementing the provisions of the Helsinki Final Act.

The Prime Minister (Mrs. Margaret Thatcher): While the implementation of these provisions is generally satisfactory, the record of the Soviet Union and a number of Eastern European countries has got somewhat worse in the course of this year.

Mr. Soley: Will the Prime Minister give an absolute guarantee that her Government's plans on immigration will not result in the United Kingdom being in breach of either the letter or the spirit of the Helsinki Final Act, particularly that part of the Act dealing with the reunification of families?

The Prime Minister: We have looked at this matter. We believe that the obligations of Her Majesty's Government under the various international conventions and agreements are compatible with the recent White Paper on immigration.

Sir Frederic Bennett: Following her comments on the failure of the Soviet Union to implement the provisions of the Helsinki treaty, will my right hon. Friend confirm that, in her view, present activities in Afghanistan—creating yet another appalling refugee problem—are among the worst examples of not merely failing to act in accord with the Helsinki treaty but acting directly counter to it?

The Prime Minister: I am aware that it appears that there may have been further troop movements into Afghanistan. We shall be looking at all these matters in preparation for the conference in Madrid, next year, which I believe will he extremely important.

Mr. James Lamond: Since the right hon. Lady is always so ready to spring to the assistance of dissidents everywhere, may I ask whether she has given any thought to the case of Professor HansKÜng in West Germany, who has been deprived of his livelihood as a teacher by the Roman Catholic Church because of his religious beliefs? Or, perhaps a little nearer home, is she prepared to help Derek Robinson, the shop steward

at British Leyland, who has been dismissed from his employment because he expressed views that were not acceptable to the management?

The Prime Minister: I am not responsible for either of those cases. In the latter case, as the hon. Gentleman knows, we have consistently said that we leave the management of these matters to the management of British Leyland. I believe that, at the moment, the management of British Leyland is in excellent hands.

Mrs. Fenner: Will my right hon. Friend give her considerable support to any representations that can be made by other of my right hon. Friends in respect of Soviet Jews who ask, under the Helsinki agreement, for permission to leave Soviet Russia? Will she particularly bear in mind people such as Ida Nudel and Mende Leevich, whose cases have attracted the sympathy of the entire world?

The Prime Minister: I most certainly will do so. There are six particular cases which have been pursued vigorously in this country and the world over and on which we made representations during the month of October. My hon. Friend asked about applications by Soviet Jews to leave the Soviet Union. There have been slightly increasing numbers leaving, but a smaller proportion, I believe, of the very much bigger number of applications. We shall, of course, continue to make representations on this vital matter.

WASHINGTON DC

02. Mr. Cryer: asked the Prime Minister when she next intends to visit Washington DC.

The Prime Minister: I visited Washington DC on Monday for talks with President Carter. I have no immediate plans for a further visit.

Mr. Cryer: When the Prime Minister sees President Carter again, will she make the position regarding the installation of cruise missiles in this country absolutely clear? Is she aware that there is a considerable body of opinion against the siting of cruise missiles in this country and against those decisions being reached without any debate in a free assembly in


Parliament here?—[interruption.]—Does she realise that there is objection to missiles being placed on the soil of this country in the sole control of the Americans when this country could be turned into a radioactive cinder heap by accident, as the incident at Colorado Springs demonstrated—[interruption.]—Does she accept—

Mr. Speaker: Order. I know that there is a lot of noise, but it is a very long question.

Mr. Cryer: Does the Prime Minister accept that cuts in public expenditure and increases in defence expenditure will mean a miserable Christmas for many people this year?

The Prime Minister: I am not quite sure which of those half dozen questions to answer. I believe that the vast majority of people in this country are well behind this Government's attitude to defence and our determination to deter the Soviet Union at all levels, whether it be the strategic level, the level of theatre nuclear forces or the level of conventional weapons.
With regard to one particular matter which I thought I heard the hon. Gentleman mention in his speech—in his series of questions—the control of these weapons is the same as the control of atomic weapons has been under successive Governments.

Mr. Kershaw: Will the Prime Minister congratulate the Foreign Secretary, and will she accept the congratulations of the House, in that, for the first time for 16 years, Rhodesia is likely to face Christmas and the prospect of peace with her self and with the international community? Was not my right hon. Friend's reception in Washington a tribute to the work that she has done in this regard?

The Prime Minister: I thank my hon. Friend for those comments. I shall gladly convey his message to the Foreign Secretary, and also to the Lord Privy Seal. It is the best possible Christmas present that the people of Zimbabwe-Rhodesia could have and the best possible Christmas present for anyone who is interested in the future of democracy in central Africa.

Mr. John Home Robertson: Did the Prime Minister discuss with President

Carter the accident at the Three Mile Island nuclear power station? Is she entirely satisfied that the Government are being responsible in planning to build similar power stations in this country?

The Prime Minister: I did not discuss that accident with President Carter. As the hon. Gentleman knows, there has been a full report about it. I believe that my right hon. Friend made a statement about the possibility of PWR reactors in this country. What is of paramount consideration is the clearance of that system for safety under our rules and regulations.

Mr. F. Enoch Powell: Will the Prime Minister refrain from visiting the American capital again so long as the United States maintains its unfriendly ban on the supply of weapons to a police force in the United Kingdom?

The Prime Minister: It is not as yet a ban. As the right hon. Gentleman knows, 3,000 Ruger revolvers were delivered for use by the Royal Ulster Constabulary, because we wished wholly to re-equip that force with those weapons, which are the best for the purpose. There is another order for 3,000 such weapons. That order has neither been accepted nor rejected. I made it perfectly clear that, if that order were rejected, it would be not only wrong, but a propaganda victory for the IRA.

PRIME MINISTER (ENGAGEMENTS)

Mr. Neubert: asked the Prime Minister whether she will list her official engagements for 20 December.

The Prime Minister: This morning I presided at a meeting of the Cabinet and later I attended the memorial service at St. Paul's Cathedral for Earl Mountbatten and those who died with him. In addition to my duties in this House, I shall be having further meetings with ministerial colleagues and others.

Mr. Nenbert: At this festive season and on the eve of the one-hundredth anniversary of the birth of Joseph Stalin, what message can my right hon. Friend send to the moderates in the Bristol, South-East Labour Party who, according to the Daily Mail today, are anxious to divest themselves of the Marxists in their midst?

The Prime Minister: All I can say to them is
Keep right on to the end of the road

Mr. Frank Allaun: Will the Prime Minister reconsider the decision to proceed with missiles before they are deployed? Apart from entangling America in the defence of Europe, will not they have exactly the converse effect, of further entangling Europe in the defence of America?

The Prime Minister: The answer is "No, Sir" Weakness has never been a defence for any country.

Mr. David Steel: Now that the Attorney-General has told the House that there are to be no criminal proceedings arising from the Bingham report, when will the Cabinet come to a conclusion about what to do concerning the decision of the House in February, on a free vote, that there should be a special inquiry into these matters?

The Prime Minister: It is not our intention to go ahead with any further inquiry. We believe that now, on the eve of signing the Rhodesia ceasefire, it is a time of reconciliation.

Mr. Montgomery: Will my right hon. Friend some time today read the leader in the Daily Mail about the extravagances of London Transport? Will she take every possible occasion to instruct people in the public service industries that they have a duty to be prudent with the taxpayers' money?

The Prime Minister: I have seen reports in the press about some alleged extravagances. I am quite certain that the present leadership of the GLC will root them out, if there are any, and will take rapid measures to see that London Transport becomes both economical and efficient.

Mr. Robert Sheldon: Will the Prime Minister resist the pressure to block Iran's funds in the United Kingdom? Is she aware that it is acceptable to take such action as a result of a decision by the United Nations Security Council, or of action in the courts in this country, but that it would do great harm to Britain's financial position if we were to block Iran's deposits in this country and prevent it from obtaining its money which is held here on deposit in banks?

The Prime Minister: As I have replied in the House before, I am advised that the law at present would not permit us to block Iranian assets in this country for a political purpose.

Later—

Mr. Alexander W. Lyon: On a point of order, Mr. Speaker, answering the Leader of the Liberal Party, the Prime Minister referred to a decision of Cabinet about an inquiry into the circumstances in which the Bingham report came about, an inquiry into the conduct of Ministers and civil servants. That decision is a reversal of a decision of this House and surely it merits a statement to the House to enable us to question the Prime Minister about the circumstances of the decision.

Mr. Speaker: The hon. Gentleman has long experience. He knows that that is not a matter for me and that it is not a point of order.

Dr. Mawhinney: asked the Prime Minister if she will list her official engagements for 20 December.

The Prime Minister: I refer my hon. Friend to the reply which I gave earlier.

Dr. Mawhinney: Bearing in mind that the majority of people in the country, in the trade unions and in the Labour Party, support the Government's proposals on employment, does my right hon. Friend agree that the hysterical reaction of some union bosses to these proposals is a denial of the leadership that they claim to offer?

The Prime Minister: I believe that the vast majority of people in this country, including the vast majority of trade unionists, support the Government's measures that were brought forward in the recent Employment Bill. I believe that there is a new, healthy attitude prevailing, which augurs well for the future.

Mr. James Callaghan: If the right hon. Lady believes that the people of this country support her policies, may I ask whether she has looked recently at the fact that prices are going up faster than ever before and faster than earnings? Has she considered that unemployment is rising again? Does she know that mortgage interest rates are at a record level? Does she understand that we are to be told that those who are out of jobs are,


from now on, to have their sick pay taxed and their unemployment benefit cut? Will she please tell me where all that is to be found in the Conservative Party manifesto?

The Prime Minister: Perhaps the right hon. Gentleman would care to read the analyses of some of these factors in some of today's publications. The Bank of England Quarterly Bulletin points out that any recession which may now be in prospect stems largely from causes lying well back in the past.

Mr. Callaghan: If the right hon. Lady cannot answer the last question will she tell us where she proposed in her manifesto that rail fares were to be increased and that prescription charges were to go up by 250 per cent.? Does she not now feel that she is responsible for grossly misleading the British people?

The Prime Minister: If I may respectfully say so, that hardly seems a strong question. I hardly think that the right hon. Gentleman included in his previous manifesto that his Government would preside over a record rise in the retail price index, record levels of unemployment and record borrowing.

Mr. Callaghan: rose—

Mr. Speaker: Mr. Callaghan.

Hon. Members: Sit down.

Mr. Speaker: Order. Before I wish the House a merry Christmas, I remind hon. Members that I have called the Leader of the Opposition.

Mr. Callaghan: We are beginning to understand that the right hon. Lady does not like answering these questions. If she looks at the record—since she is referring to it in her attempt to evade answering my last question—she will see that inflation was 7·4 per cent. just over a year ago. It is now 17·4 per cent. She will also see that unemployment went down by 100,000 during the last year of the Labour Government. It has gone up by 30,000 in the last three months, and under her Administration the British people can look forward to a pretty miserable 1980.

The Prime Minister: May I remind the right hon. Gentleman that during the first six months of the last Labour Government the standard rate of income tax rose

from 30 per cent. to 33 per cent. and that the top rate was increased from 75 per cent.—[Interruption.]—to 83 per cent.

Mr. Speaker: Order. Everyone has a right to be heard in this House.

Mr. Ashton: Resign.

The Prime Minister: During the first six months of the Conservative Government income tax was reduced from 33p to 30p in the pound and the top rate of income tax was reduced from—[Interruption.]—83 per cent. to 60 per cent.

Mr. Speaker: Order. Right hon. and hon. Members must remember where they are. The very basis of our House is that an hon. Member has the right to say something that other people do not want to hear.

The Prime Minister: May I remind the right hon. Gentleman that he started with 600,000 unemployed and he jolly well nearly doubled or trebled that figure. Finally, Mr. Speaker, may I wish you "glad tidings of comfort and joy".

Mr. Callaghan: rose—

Hon. Members: Sit down.

Mr. Speaker: Order. I am entitled to the same greetings from both sides of the House.

Mr. Callaghan: Mr. Speaker, I was rising to offer you, from this side of the House, good tidings and greetings, which is much more than the British people can expect from the Government.

ROYAL ASSENT

Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:
1. Consolidated Fund (No. 2 Act 1979
2. European Communities (Greek Accession) Act 1979
3. Isle of Man Act 1979
4. Shipbuilding Act 1979
5. Zimbabwe Act 1979
6. Stirling District Council Order Confirmation Act 1979


7. Dumbarton District Council Order Confirmation 1979
8.Greater Glasgow Passenger Transport Order Confirmation Act 1979
9. Kilmarnock and Loudoun District Council Order Confirmation Act 1979
10. Scots Episcopal Fund Order Confirmation Act 1979
11. University College London Act 1979
12. Greater London Council (General Powers) Act 1979
13. City of London (Various Powers) Act 1979

BUSINESS OF THE HOUSE

Mr. James Callaghan: May I ask the Leader of the House to state the business for the week after the Christmas Adjournment?

The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): The business for the first week after the Christmas Adjournment will be as follows:

MONDAY 14 JANUARY—Second Reading of the Tenants Rights etc. (Scotland) Bill.

Motions on the Rate Support Grant (Scotland) Order, and on the Housing Support Grant (Scotland) Orders.

TUESDAY 15 JANUARY—Second Reading of the Housing Bill.

Remaining stages of the Petroleum Revenue Tax Bill.

Consideration of Lords Amendments to the Bail etc. (Scotland) Bill.

WEDNESDAY 16 JANUARY—Motions On the rate support grant orders for Eng land and Wales.

Motion on the Value Added Tax (International Services) (No. 2) Order.

THURSDAY 17 JANUARY—Remaining stages of the Competition Bill.

Motions on the Southern Rhodesia orders.

FRIDAY 18 JANUARY—Private Members' motions.

Mr. Callaghan: I take it that the business is to some extent provisional, in view of the serious situation that may develop in the steel industry and the over-spill that may affect the coal industry and elsewhere if there should be a strike. We hope that there will not be a strike, but in the circumstances I take it that the Leader of the House would rearrange the business so that the House could discuss what could be a catastrophe.
I am disappointed that we have not yet had the debate on defence. It has been half-promised by the Leader of the House. The Secretary of State for Defence clearly wishes to have a debate and we have asked for one. What is there in the business for Thursday that would prevent its being put back to the


following week, so that we could achieve what is, apparently, the desire of the Government and is certainly the desire of the Opposition?

Mr. St. John-Stevas: When one is announcing business this far in advance there must always be an element of the provisional, and it is subject to review in the light of various developments. I agree with the right hon. Gentleman about the defence debate. We should have a debate very soon after we return. The right hon. Gentleman says that I have half-promised the debate. May I now go three-quarters of the way and say that I hope to have the debate in the following week?

Mr. David Steel: The Leader of the House will have heard the exchanges a few minutes ago. Does he not believe that there is an obligation on the Government, when they decide to overturn a decision of the House, to say so by means of a clear statement and be subject to cross-examination on it? Will the Leader of the House arrange for such a statement?

Mr. St. John-Stevas: I cannot agree to that, because it is a clear constitutional doctrine that no Parliament can bind its successor Parliaments. Every decision that is taken by a Parliament binds that Parliament, but not its successors. The Conservative Party's attitude has been consistent, both in Opposition and in office. We feel that no good is to be served by raking over those almost dead coals.

Several Hon Members: Several Hon Members rose—

Mr. Speaker: Order. In last night's important debate many hon. Members were not called when they wished to be called. The same will happen tonight if hon. Members take up too much time on business questions. A statement is to follow. I ask hon. Members to be as brief as possible.

Mr. Higgins: Does the Leader of the House recall that some time ago he expressed the hope that we should be able to debate the Select Committee report and the Goodman report on charities before Christmas? Could he arrange for such a debate early in the new year?

Mr. St. John-Stevas: I am most anxious to make progress in this matter.

We are waiting for a reply from my right hon. Friend the Home Secretary. When that is given, the House can proceed.

Mr. Alexander W. Lyon: Will the Leader of the House reconsider the strange constitutional doctrine that he is propounding, that the decision of one Parliament can be overruled by the veto of a Cabinet? The Leader of the House has not brought the issue to the House so that the House can reconsider the question. If he really wants to respond to his constitutional doctrine should he not give the House the opportunity to reconsider in the light of the changed circumstances?

Mr. St. John-Stevas: A resolution of the House is not in the same category as legislation, because legislation, of course, binds successive Parliaments until it is repealed. The Government's attitude has been consistent. That attitude is even stronger and more justified today. What possible good can be served, when peace is in sight in Rhodesia, by raking up this stuff all over again?

Mr. Latham: Since a Foreign Office Minister recently visited Israel, does my right hon. Friend envisage that a statement will be made on that mission or, alternatively, may we have a debate on the Middle East? We wish to be assured that there is no change in Government policy.

Mr. St. John-Stevan: I can assure the House that there is no change in Government policy towards the Middle East. Our policy is to bring peace to that troubled part of the world. Whether we can have a debate on foreign affairs after the recess must remain to be seen when the House returns.

Mr. William Hamilton: Can the Leader of the House confirm that he has had, or is about to have, talks with the supporters of the Abortion (Amendment) Bill about the availability of Government time for its remaining stages? Will the right hon. Gentleman give a categorical assurance that such time will not be given?

Mr. St. John-Stevas: I have had no talks with anybody about the granting of Government time for the Abortion


(Amendment) Bill. However, an abortion Bill was introduced when the Labour Party was in power, and the Government gave time for the Bill to be discussed so that the House could reach a decision.

Sir Frederic Bennett: Will my right hon. Friend take note that enthusiasm for an early defence debate is not confined to the Opposition but that we are all looking forward keenly to such a debate, with a Division at the end, so that we can see where all Opposition Members stand on this issue?

Mr. St. John-Stevas: My hon. Friend's observation confirms me in what I said to the Leader of the Opposition—that we hope to have the debate soon after we return. I am seven-eighths of the way to meeting the Leader of the Opposition.

Mr. Dubs: Yesterday the House debated the Health Services Bill. We have not yet had time to discuss the Royal Commission on the National Health Service. Does the Leader of the House agree that we are debating these matters in the wrong order and that we should have discussed the Royal Commission report before giving a Second Reading to a Bill the provisions of which may be influenced by that report? May we have an early debate on the two other outstanding reports—the May report and the report on legal services?

Mr. St. John-Stevas: In an ideal world the hon. Gentleman would be right. It would have been better to have a debate on the report first. Unfortunately, such a debate could not be fitted in. However, I shall try to fit in that debate as early as possible after we return from the recess.

Mr. Marlow: Will my right hon. Friend arrange a debate without too much delay on the Government's sensible and popular proposals, disclosed last week in the Daily Mirror, whereby people who are on strike should be deemed to be receiving strike pay before they receive State assistance?

Mr. St. John-Stevas: The Daily Mirror is a stimulating and interesting paper but it is not a reliable source of Cabinet decisions before they are announced.

Mr. Shore: May I revert to the unsatisfactory answer that the Leader of the

House gave to the Leader of the Liberal Party and to my hon. Friend the Member for York (Mr. Lyon) on the casual announcement this afternoon of an important Government policy? I refer to the general Government decision not to proceed with the prosecution of British companies that have broken British law.
Throughout our debates on the Zimbabwe Bill it was plain that the amnesty then proposed was an intra-Rhodesian amnesty designed to bring about conciliation between the parties to the dispute. The general question of our public position in the rest of the world—whether we mean what we say, and our reputation for fair dealing—is at stake in Bingham. It is not good enough to dismiss this matter in such a cursory way.

Mr. St. John-Stevas: The right hon. Gentleman is confusing two different issues. The first issue is the question of the decision by the Director of Public Prosecutions not to proceed with prosecutions. That is a matter not for me but for the DPP. The second issue involves an inquiry. The right hon. Gentleman's opinion is that an inquiry would be useful. That is not the Government's opinion. We believe that an inquiry of this nature is unnecessary and untimely and would be liable to damage Britain's reputation and cause embarrassment at a time when peace is, thank goodness coming to Rhodesia.

Mr. Kilfedder: Since the Common Market Commission is stalling in its prosecution of the French Government for failing to allow British lamb into France, will the Government provide time so that the House can demonstrate its contempt for the French action and for the Common Market Commission?

Mr. St. John-Stevas: It is most important that the law should be obeyed, whether it is domestic law or international law. I shall exert what influence I have over the French President in order to persuade him to comply with that request.

Mr. Skinner: Is the Leader of the House aware that if the predicted steel strike takes place early in the new year many of my hon. Friends who represent coal and steel communities and heavy industry areas will feel that it is necessary to come back to Parliament a week


early to take the opportunity to educate the Tories into ending their lunatic policy of allowing imported coal into Britain? Is he aware that that policy is shutting down pits in South Wales and elsewhere? The Government should establish a decent wage, at least in line with the cost of living, for the many thousands of steel workers.

Mr. St. John-Stevas: Of course I agree that there is a serious situation in the steel industry. I understand that a meeting is taking place tomorrow. We must all hope that there will be a reasonable settlement to the dispute.

Mr. George Robertson: I am sure that the Minister is considering the possibility of a debate on the consultative document on the structure and management of the National Health Service in Scotland. While he is doing that, will he consider the remarkable statement that was made yesterday at Scottish Question Time by the Under-Secretary of State for Scotland, who said of that document, which is still not in the Vote Office:
However, there is no question of a consultative document of that nature being put in the Vote Office."—[Official Report, 19 December 1979: Vol. 976, c. 603.]
Will the Leader of the House reflect that his Scottish colleagues are increasingly running the Scottish Office by press release from Edinburgh rather than through the House?

Mr. St. John-Stevas: The document to which the hon. Gentleman referred was published by the Stationery Office. It was not a White Paper, nor was it a Parliamentary Paper. The hon. Gentleman is right in saying that the normal procedure is to make such copies available to the Library. That should have been done. I regret that it was not.

Mr. James Callaghan: Following the question from my hon. Friend the Member for Bolsover (Mr. Skinner)—[HON MEMBERS: "Ah."] Well, if I were in a trench I would sooner have my hon. Friend with me than some Conservative Members.

Mr. Speaker: Order. Hon. Members are getting very excited. I know that we rise tomorrow, but we must deal with today's business first.

Mr. Callaghan: Christmas is breaking out all over. I want to follow up my

hon. Friend's question, because the Opposition have been considering how to use parliamentary procedures in order to get a debate on the serious situation into which we seem to be drifting in coal and steel. We have not forced this issue, because we understand from the Leader of the House that negotiations are going on, and we do not wish to prejudice them. I am sure that the Leader of the House understands that if there were a steel strike and consequences flowed from that, it could be the biggest catastrophe since 1926. I am sure that that is being borne in mind by the negotiators. Will the right hon. Gentleman give an undertaking that in the event of such a strike on 2 January he will consult the Prime Minister in order to ask Mr. Speaker to recall the House at an earlier date?

Mr. St. John-Stevas: As the right hon. Gentleman pointed out, I appreciate the importance of saying nothing at this stage that could exacerbate the situation. The Government are always watching to see whether such a recall of Parliament is necessary. However, it would be inappropriate to give the right hon. Gentleman such an undertaking.

Mr. Michael Brown: Does my right hon. Friend accept that the best way to meet the Leader of the Opposition's request is for the general secretary of the Iron and Steel Trades Confederation to accept the considerable body of opinion that is now hardening within his union, and within my constituency, against the strike? This morning I received more than 500 signatures from members of that union expressing opposition to a strike. Does my right hon. Friend accept that perhaps there is no feeling for a strike among members of that union?

Mr. St. John-Stevas: This matter is under negotiation, but I am sure that we would all agree that a strike should be used as a weapon of last resort, after every other effort to secure conciliation and peace has failed.

Mr. Faulds: Are not the handling of the Blunt case and now the abandonment of the Bingham report and the proceedings arising from it, concerning the breaking of oil sanctions—which prolonged the rebellion in Southern Rhodesia and the civil war, with a consequent increase in loss of life and damage to neighbouring countries—both further evidence of a


decline in the standards of Government conduct? Should the House not have an early opportunity to debate that damaging decline in standards?

Mr. St. John-Stevas: There has been no decline in standards of conduct, although there has recently been a decline in standards of acting.

Mr. Faulds: On a point of order, Mr. Speaker. May I point out to the Chancellor of the Duchy of Lancaster that even those of us who care for him are becoming tired of his quips and quiddities when serious matters are being discussed?

Mr. Speaker: Order. The Leader of the Opposition said that Christmas was breaking out, but it is breaking out in patches. In the interests of the House, I shall call four more hon. Members and I shall then move on to the statement.

Mr. Gregor MacKenzie: The business that the right hon. Gentleman has set down for Monday 14 January is unacceptable to the majority of Scottish Members. Bearing in mind that he has put down three of the most controversial pieces of legislation—a tenant's rights Bill, a rate support grant order and a housing support grant order—all of which are exceptionally controversial—would it not be more sensible if he postponed the Rate Support Grant (Scotland) Order to another day? We all want to discuss it at length.

Mr. St. John-Stevas: I have been under great pressure to have those subjects debated. There will be a general debate on those issues, and there will be an opportunity to debate and vote on the orders. We have had discussions through the usual channels, and if the right hon. Member for Rutherglen (Mr. MacKenzie) objects to that arrangement, he should raise his objections through the usual channels.

Mr. English: Tonight we shall discuss whether Ministers should be allowed to attend an hour and a half later than Back Benchers on Fridays. Has the promise of the Leader of the House, made on 31 October, been carried out? He said then that the decision of the House could not be implemented immediately, because he would have to undertake consultations about the effect on staff, and so on. However, rumours are going round that no

such consultations have been held and, indeed, that they have been deferred until February. Will the Leader of the House tell us now, so that we can debate the subject sensibly tonight, what consultations have been held with the staff on these premises concerning the effect of sitting from 9.30 am to 3 pm on Fridays?

Mr. St. John-Stevas: That is a question not only for myself but for the Commission. There have been consultations, but we have not yet passed the motion. If the hon. Gentleman thinks that further consultations should take place, of course we shall carry them out.

Mr. Well beloved: Will the Leader of the House undertake to find time for a debate, before any decision is made, on the outrageous proposal that Members of the European Parliament should have facilities within the precincts of West-minster? Is he aware that trade unions and other responsible bodies are unable to book rooms, and that hon. Members are forced to use rooms outside the precincts? Is he further aware that although many of us will not join my right hon. Friend the Leader of the Opposition and my hon. Friend the Member for Bols-over (Mr. Skinner) in the same trench, we may well be forced to share a squat?

Mr. St. John-Stevas: It is not outrageous that consideration should be given to the question whether there should be some form of limited access—[HON. MEMBERS: "No."]—to the House by Members of the European Parliament.

Mr. Les Huckfield: No.

Mr. St. John-Stevas: The hon. Gentleman has a different view. I am entitled to my view, just as he is entitled to his. That decision will eventually have to be taken by the House, and it is up to the House to decide on these allied matters.

Mr. Race: May I draw the attention of the Leader of the House to reports that appeared in the newspapers this morning, and the exchanges in the House yesterday, concerning the allegations made by nurses at Broadmoor hospital about the ill-treatment of patients there? Can he give an assurance that there will be a very early debate on this subject, given the direct responsibility of the Secretary of State for Social Services to this


House for the running and organisation of special hospitals?

Mr. St. John-Stevas: I have seen the somewhat distressing reports to which the hon. Gentleman has referred. I can not promise a debate, but I shall certainly draw the matter to the attention of my right hon. Friend.

BRITISH LEYLAND

The Secretary of State for Industry (Sir Keith Joseph): With permission, Mr. Speaker, I should like to make a statement about the British Leyland 1980 corporate plan. In reviewing the plan, the Government have borne very much in mind their responsibilities to the taxpayer as well as to all those concerned with the future of BL. I am bound to say that the situation is not encouraging. The company continues to be in a poor financial state and faces strong competitive pressures in the 1980s. Only with very substantial improvements in BL's all round performance will the company survive. Success cannot by any means be guaranteed.
Details of BL's recent performance and of the plan are contained in a report by the staff of the National Enterprise Board, which I have today placed in the Library of the House and in the Vote Office.
The plan offers, in the BL board's view, the only feasible strategy which could give BL the chance of being viable. The chairman has writen to assure me that, if the Government decide to support the plan, the board and management will pursue it with the utmost vigour. However, in the same letter—which I am publishing in the Official Report—the chairman states clearly that if there is a significant shortfall in cash flow whether due to major disruptions through internal or external strikes, or to delays in any of its programmes for investment and launch of new products, restructuring and redundancies or for improving productivity and working practices, or to any other cause internal or external, the board will abandon the plan.
The plan envisages a requirement for £297 million of public funds in 1980, with a further £133 million between 1981 and 1983. These two sums together represent the £225 million balance of the original Ryder £1,000 million, plus £205 million to meet the cost of redundancies and closures under the management's restructuring programme. The company seeks approval at this stage for only its 1980 requirements.
In the light of the chairman's letter, the Government have decided to fund the plan up to the end of 1980–81 by the


provision of £150 million in equity form, with an additional facility on which BL would be entitled to draw on evidence of need up to a maximum of a further £150 million. In addition, we accept the BL board's request for conversion to equity of the £150 million loans provided in 1977. The Government will also be looking to BL to contribute to funding needs from its internal resources, including the disposal of assets where this makes commercial sense. To the extent that the plan calls for funds going beyond the Ryder £1,000 million, clearance from the Common Market Commission will be necessary.
I am sure that right hon. and hon. Members on both sides will join with me in wishing the BL board, management and work force success in the task that lies ahead.

Mr. John Silkin: The Secretary of State said that success cannot be guaranteed. Does he agree that the key to BL's future lies in the new model programme? As a new model takes about four years to reach fruition, and as his plans end in 1980–81, how does he propose to guarantee that the new model programme, should it be the right one, is able to continue?
Secondly, as the statement implies—as I believe that it does—that there will be significant sale of commercial assets, which assets does he believe, or has BL told him, it would make commercial sense to sell?
Finally, as France and Germany in particular find it necessary to invest at least double the amount about which BL is now talking, how much more of our domestic market does the right hon. Gentleman feel that he is able to see disappear to our foreign competitors without himself being willing to provide the investment funds?

Sir K. Joseph: The plan goes up to 1985, but the only finance requested by the BL board is for 1980. It is true that new models are an essential part of the plan. It is intended that one new car model will be launched in 1980, and new truck models will also emerge during that year. Therefore, to some extent, they are imminent. However, while new models are vital, they are not the only component of success. There are also pro-

ductivity and quality. As to disposals, the judgment on them is for the management.

Mr. Bruce-Gardyne: While entirely understanding the political logic of what my right hon. Friend has just announced, may I ask him whether he will contemplate the possibility that a trickle system of support for this industry must be open to question on commercial grounds, and that there must be at least an argument for saying that the time has come to appoint a receiver with the obligation of obtaining the maximum financial resource for this business as a going commercial concern to the extent that it can be made such? Can he assure the House that we shall be given an early opportunity to vote on this matter so that hon. Members may register their responsibilities to their constituents as taxpayers for what decisions are taken in their name?

Sir K. Joseph: When my hon. Friend studies the letter that I am publishing in the Official Report, I think that he will find that the attitude of the BL board to the performance required to fulfil this plan is a realistic one and is not consistent with his description—which I well understand from past occasions—of trickle finance. Moreover, there have been just enough changes in performance, both in management and in some parts of the work force, to justify what the Government have decided.
I shall have a word with my right hon. Friend the Leader of the House on the possibility of a debate on the subject.

Mr. Terry Davis: How much money must BL find from internal sources? Do not the present stock levels show that the real BL problem is a sales problem and not a production problem?

Sir K. Joseph: The details about the internal resources depreciation provision will be found in the document that is now available in the Vote Office. Certainly there is a sales problem for some BL products, but for others there is a queue.

Mr. Hordern: In view of the long and continuing indebtedness of BL to the tax-payer, and in view of my right hon. Friend's obvious confidence in the management, what possible point can there be in the continued intervention of the National Enterprise Board in this affair?


Will my right hon. Friend now consider bringing BL under the direct control of his Department?

Sir K. Joseph: I said to the House that if the BL board repeated its wish to be transferred from the NEB I would study its arguments; I did not say that its case was on all fours with that of Rolls-Royce. That still remains the position.

Mr. Penhaligon: Does the right hon. Gentleman's statement mean, in effect, that if there is a substantial strike by British Steel the Government will close BL?

Sir K. Joseph: That raises a number of hypothetical questions. In my statement I set out the position as seen by the BL board and by the Government.

Mr. Cryer: Does the right hon. Gentleman accept that, with BL admittedly in a poor financial state, it would make sense if the Government assisted by the use of selective import controls—in addition to advancing money—as that would also ensure continuing demand for British steel? Does he not think that that is an important factor?
Does the right hon. Gentleman accept that some Opposition Members are concerned about the strong threats that are attached to the advance of money? Does he accept that the workers have a contribution to make, and that if they differ from the management, that should be no reason for the board to abandon this plan? For example, 14 months ago the BL management threatened to sack workers for refusing to work a night shift at the Rover plant in Solihull, which is now on a four-day week. What would the right hon. Gentleman say to critics who describe the situation as being very much like corporate Fascism?

Sir K. Joseph: Import controls are not the answer. BL is a large exporter and the way for it to recover its share of the market and to prosper is by being competitive, not by being protected. Of course the workers have a contribution to make. There is some evidence that they recognise that fact more and more.

Mr. Kenneth Baker: Does my right hon. Friend agree that recent events at BL justify his confidence in the continued existence of the company under the management of Sir Michael Edwardes? While there are modest signs of hope for

the success of the general support, does he regard the statement that he made today as being in the nature of BL's last chance?

Sir K. Joseph: I associate myself with my hon. Friend's commendation of and tribute to Sir Michael Edwardes. However, I do not wish to dilute or qualify the balanced picture which I tried to present in my statement. There is enough evidence to justify the Government's proposals. Future success is up to the management and work force of BL.

Mr. Archer: Since the people that the Secretary of State referred to as those who are concerned with the future of BL include the present and future population of the West Midlands, and since the Government are ensuring that the West Midlands economic development council is not available for consultation, will the right hon. Gentleman give an undertaking that no decisions affecting the future of BL will be taken without the fullest consultation with the trade unions, the local authorities and the hon. Members who represent that region?

Sir K. Joseph: The Government try to keep themselves aware of the opinions of all who are concerned, including those whom the right hon. and learned Gentleman has mentioned.

Mr. Hal Miller: While I thank my right hon. Friend for the encouragement that he has given to all those who work in BL and for giving the lie to those who put it about that the Government would not support this British industry—[Interruption.] Oh, yes; in my constituency many such rumours were put about.

Mr. Skinner: The hon. Gentleman is enjoying himself.

Mr. Miller: Will my right hon. Friend confirm that the money is intended for investment in new models and that it is not for the support of working capital? Therefore, in a real sense, it is up to the workers to make a success of the plan.

Sir K. Joseph: I agree with the last part of my hon. Friend's question. However, part—not a substantial part—of the money will be for working capital, the larger part will be for investment, and some will be to meet closure and redundancy payments.

Mr. Park: First, is the Secretary of State satisfied that the proposed contraction will not lead to further contraction? There is a danger that Sir Michael Edwardes may have gone too far. Secondly, what opportunities will there be for British components manufacturers to tender for the BL-Honda and the other models for which, so far, they have not had the opportunity to tender? Thirdly, what consideration has been given to the use of plants due for closure as industrial estates? Will the right hon. Gentleman give consideration to the provision of finance so that new Jaguar, Rover and Triumph models may be brought forward before 1985?

Sir K. Joseph: The answer to the first two questions is that the Government have confidence in the management of BL. Both matters are for the management to decide. The possible use of plant that is closed is for the market and the authorities concerned to consider in each case.

Mr. Grylls: If my right hon. Friend is right that BL is in a poor financial state, is it not odd to pour £400 million more down its throat? Is not the solution, as he suggested some months ago before the election, to insist that BL finds money from its own resources by returning some or part of the business to the private sector? The one thing that BL does not need is more money poured down its throat. It needs more productivity and more sales and then it will have enough money without having to call on the taxpayer.

Sir K. Joseph: My hon. Friend is quite right in his latter points. However, I hope that he will recognise that there are costs to the taxpayer, whatever may be the decision of the Government. Disposals are a matter for the board. We look to it to make disposals where they would make commercial sense. There are already negotiations in progress on at least one disposal.

Mr. Dalyell: In view of the answer that the right hon. Gentleman has just given and the nagging speculation in the Scottish press, will he give a cast-iron assurance that the Government will do nothing to encourage the sale of commercial assets in the truck and tractor

division in plants such as Bathgate and Albion?

Sir K. Joseph: The hon. Gentleman knows that I cannot give any such assurance about a management decision. The management needs my approval for disposals.

Mr. Dalyell: But what about the right hon. Gentleman's encouragement?

Sir K. Joseph: I have to plead guilty to the hon. Gentleman—we are encouraging the management to pursue disposals where they make commercial sense.

Mr. Hill: Has my right hon. Friend, through the NEB management, received the assurance that he sought at one time that improved labour relations and productivity could be confirmed by Sir Michael Edwardes? When my right hon. Friend talks about the 1980 new models, we can only hope that, once again, BL does not create a black market in new models because the production line is unable to keep up with demand. If my right hon. Friend can tell the House that he has been assured on those points, I will support him throughout in this matter.

Sir K. Joseph: There was an improvement in labour relations, so far as that can be measured by the number of disputes in BL in the last 12 months. There has also been some evidence of an improvement in productivity. However, both have been obscured and offset by the effect on BL of two external strikes—the transport drivers' strike and the CSEU dispute.

Mr. Rooker: Is the Secretary of State aware that no interpretation can be put on Sir Michael Edwardes's letter other than that, if the steel strike goes ahead and there is a shortage of steel for BL, it will abandon the plan? That is not a hypothetical question, as he told the hon. Member for Truro (Mr. Penhaligon). Will he state categorically here and now whether there has been any meeting by any Minister or civil servant in his Department with a representative from Renault about the possible purchase of any part of BL?

Sir K. Joseph: At any time?

Mr. Rooker: Since the right hon. Gentleman has been in office.

Sir K. Joseph: The question about the steel strike is hypothetical. Who can predict the length of any such strike, if it occurs, the effectiveness of such a strike or the stocks held by BL? All those factors make it a hypothetical question. Apart from a social function in Paris where I met a number of French industrialists, including a member of the top management of Renault, for a general discussion with no specific reference to BL, there has been no meeting between Renault and myself. To my knowledge, my Department has had no contact with Renault. I believe that today Renault dissociated itself from a report in the press yesterday.

Mr. John Patten: I accept that matters of international co-operation between BL and foreign firms are quite properly management questions, but will my right hon. Friend give an undertaking to encourage BL in all its present and future potential links with firms like Honda and in the forthcoming agreement at Cowley?

Sir K. Joseph: Yes, so far as it is proper for me to intervene in any such essentially management matter.

Mr. Stoddart: Is the right hon. Gentleman aware that I am relieved that he is at least providing £300 million for 1980, but that I am not at all sure that I like the implied threats that accompany it? Is he convinced that that amount of money will enable British Leyland to update its plant and models to compete abroad, and is he satisfied with the quality of management in British Leyland?

Sir K. Joseph: The amount of money is that which the BL board asked for, and I have great confidence and respect for the BL board. It is not my job to answer for the management of such a large company. That is up to the BL board.

Mr. Marlow: Did Sir Michael Edwards say in his letter to my right hon. Friend that his acceptance of Government money as equity will be dependent on achieving a wage settlement such as that proposed? No doubt when my right hon. Friend invests his own money as equity he looks to the dividends that he is likely to receive in a year or two. Could he say what dividend the public will get from the investment in British Leyland?

Sir K. Joseph: No, there was no such condition in the chairman's letter, and there will be no dividend during the currency of the plan. I repeat to my hon. Friend that, whichever decision the Government came to on the plan, there would have been costs on the taxpayer.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. If hon. Members co-operate and ask brief questions, I shall call them, as I know that there are constituency interests. However, I hope that hon. Members will be brief, because of the debate that is to follow.

Mr. Cockeram: Does my right hon. Friend accept that in a period of world recession and high interest rates, many small and medium businesses are struggling to survive, and they resent the fact that they are being taxed to prop up a company with such an appalling labour relations record?

Sir K. Joseph: I repeat that there would also have been a cost on the taxpayer from any other decision, and I remind him that a large number of small and medium companies are also suppliers to BL.

Mr. Budgen: I congratulate my right hon. Friend on having resisted the much larger demands of British Leyland for about £2 billion, but does he agree that there is considerable danger that this system of financing by trickles and dribbles will cause the profitable parts of British Leyland to be dragged down by the unprofitable parts?

Sir K. Joseph: I take my hon. Friend's comments seriously, but we have a realistic BL board, and it is not right to assume that it approached the Government for a much larger sum of money, as was indicated in newspaper reports.

Mr. Butcher: Will my right hon. Friend bear in mind the grave concern of major British component manufacturers that together employ about 450,000 people over the proposed BL-Honda deal? Bearing in mind that my right hon. Friend must allow the company's management to manage, will he consider issuing guidance, as do Ministers in other countries, to British car assemblers that there should be minimum percentage British component factor in all cars assembled in this country?

Sir K. Joseph: A substantial part of the car that will be built with Honda will be supplied by British factories, and component manufacturers are sensibly pursuing sales abroad as well as at home.

Mr. Stokes: Is my right hon. Friend aware that there are many good employees in BL, and a lead and encouragement must be given to these people if the company is to be saved? They must assert themselves against the extremists.

Sir K. Joseph: My hon. Friend will agree that Sir Michael Edwardes is making great efforts to give what appears to be an effective lead.

Mr. Park: On a point of order, Mr. Speaker. The Secretary of State must have been misinformed. He said that the BL-Honda car will be assembled mainly from parts made in this country.

Mr. Speaker: Order. I do not know whether the Secretary of State is right or wrong, but he takes responsibility for his statements in the House, and we cannot argue that matter now.

Sir K. Joseph: Further to that point of order, Mr. Speaker. If I said "mainly" I was wrong, but I do not think that I did.

Mr. Adley: In relation to disposal of assets, my right hon. Friend repeated the phrase "where this makes commercial sense", but will he consider that, although he is presuming that British Leyland is the sole arbiter of what makes commercial sense to British Leyland, he is not supposing that British Leyland is the sole arbiter of what makes commercial sense in the national interest? Does he recognise that, as in the case of MG, there may be a direct conflict between the national interest and that of BL? On that issue at least will he keep an open mind and keep an eye on British Leyland to ensure that it does not act in its own interest and contrary to the national interest?

Sir K. Joseph: I am sure that my hon. Friend will make it necessary for me to keep an eye on that aspect, and I am assured that serious negotiations are going on.

Mr. Beaumont-Dark: Is my right hon. Friend aware that his statement will be widely welcomed in Birmingham and the West Midlands, not just at British Ley-

land but amongst the hundreds of component manufacturers whose jobs depend on a prosperous British motor industry? Does he agree that many hon. Members who criticise British Leyland would better spend their time seeing the problems of the industry in practice instead of just talking from theory?

Sir K. Joseph: Yes.

Following is the letter:

"The Rt. Hon. Sir Keith Joseph, Bt, MP,

Secretary of State for Industry,

Ashdown House,

123 Victoria Street,

London, SW1E 6RB.

19th December 1979

Dear Secretary of State,

I should like to make clear beyond any doubt the basis on which my Board have sought from the Government the funds needed for the 1980 Corporate Plan.

Considerable hazards face us from within and without. The Board will monitor progress very closely, and if shortfalls in performance place the achievement of the Plan in jeopardy, then the Board consider that they will have no option but to abandon the Plan.

In particular if there is a significant shortfall in cash flow whether due to major disruptions through internal or external strikes, or to delays in any of our programmes for investment and launch of new products, restructuring and redundancies or for improving productivity and working practices, or to any other cause internal or external, the Board will abandon the Plan.

If the Government decides to support the Plan and provide the funds, you can be assured that the Board and management will pursue it with the utmost determination and commitment. I have every reason to believe that this goes for our employees as well.

Yours Sincerely,

Michael Edwardes."

NUCLEAR POWER

Mr. Abse: On a point of order, Mr. Speaker. During the proceedings on Tuesday, the Secretary of State for Energy made a statement on nuclear matters, and I put a number of questions to him, one of which was directed to the proposed atom plant at Portskewett. He replied:
The CEGB has informed me that it does not intend to press its application to build an advanced gas-cooled reactor at the Portskewett site."—[Official Report, 18 December 1979; Vol. 976, c. 299.]
That statement was received with great relief throughout Wales. Unhappily, immediately after the announcement was made public, the CEGB made a considerable number of statements, all of which flatly contradict what the Secretary of State said. In a press report this morning the CEGB board spokesman said:
We are not making any application for an American-type water-cooled reactor at Portskewett but we are pressing ahead with our original application for a gas-cooled reactor.
On any view, there is a huge gap between what the House was told and what was said outside. I fully appreciate, Mr. Speaker, that you cannot be held responsible for what the Secretary of State says in this House, but—

Mr. Speaker: Order. I hope that the hon. Member is about to raise a point of order that I can deal with and is not just making a personal statement.

Mr. Abse: My point of order is that large numbers of people involved in organising protests at a public inquiry are in confusion because the Secretary of State has misinformed the House. I trust that it is at least possible for me to ask you, Mr. Speaker, to encourage the Secretary of State to make a statement to the House because of the flat contradictions that exist about a project costing £1·5 billion.

Mr. Speaker: Order. The hon. Member knows that I exercise no discretion over statements made by Ministers. I allowed the hon. Member to make his point to the House, which is what he wanted.

Mr. Roy Hughes: Further to that point of order, Mr. Speaker. The statements of the Secretary of State are a matter of concern to the whole House. They are causing considerable embarrassment to hon. Members and many of our constituents—

Mr. Speaker: Order. I am sorry to interrupt the hon. Member, but I explained earlier that it was not a point of order. Both hon. Members have drawn attention to the anxiety in their area about the matter, and I am quite sure that that will be noted. I am anxious that we should move on to the main business, as there are many hon. Members who want to speak. I hope that the hon. Member for Newport (Mr. Hughes) will accept that he has expressed his anxiety and that there is no point of order on which I can help.

Orders of the Day — SOCIAL SECURITY BILL

Order for Second reading read.

Mr. Speaker: Before I call the Secretary of State, I should inform the House that at 7 o'clock I propose to exercise the discretion of the 10-minute rule for speeches.

The Secretary of State for Social Services (Mr. Patrick Jenkin): I beg to move, That the Bill be now read a Second time.
The House is becoming accustomed to dealing with a social security Bill in almost every Session. This Bill, however, contains the first stage of a major reform of the supplementary benefit scheme. It is, therefore, a good deal more than just a routine tidying-up measure. It also faces up to some of the problems confronting the nation from the rising share of the national income absorbed by social security.
Social security Bills tend to be complicated, and this is certainly no exception. We have, therefore, tried to find ways to help the House. First, we have detailed the changes in the supplementary benefits scheme in a short White Paper published with the Bill. The changes are numerous and technical, and it would be difficult to do them justice in a Second Reading speech. I hope that the White Paper will be a helpful guide.
Secondly, we have made use of the device known as a Keeling schedule. Last year when we debated a social security Bill—I am sure that the right hon. Member for Salford, West (Mr. Orme) will recollect it—I said that these Bills would be very much easier for the House to understand and deal with if, in suitable cases, the sections of the Act that are being amended were reprinted in a schedule to the Bill, with the amendments clearly shown. The procedure for that is a Keeling schedule. This forms part2 of schedule 2. It sets out the provisions of the Supplementary Benefits Act 1976, as amended by the Bill. Its intention is to enable Members to see at a glance what the legislation would look like if the Bill became law.
Thirdly, in order to help members of the Standing Committee in their consideration of the Bill, we are preparing comprehensive notes on clauses in the usual way. They will be available as soon as the Committee is appointed.
Fourthly, the Bill contains wide powers to make regulations, particularly to fill in the framework of the new supplementary benefit scheme. Members of the Standing Committee will also have a paper setting out how it is proposed to use these powers.
I turn now to the substance of the Bill. It has five main objectives.
First, it enacts the Government's firm commitment to protect pensions and other long-term benefits against rising prices, in place of the existing and unsustainable commitment to link benefits with the higher of prices or earnings.
Secondly, the Bill provides for the reform of the supplementary benefit scheme. Thirdly, arising from that reform the Bill establishes a new Social Security Advisory Committee, which will cover both contributory and non-contributory benefits. It abolishes the separate Supplementary Benefit Commissions in Great Britain and Northern Ireland and the National Insurance Advisory Committee. Fourthly, we are taking powers to extend equal treatment for men and women in social security. Finally, there are the inevitable tidying-up amendments to existing social security law.
I recognise that the Bill is controversial in some respects. We shall listen with interest to the speeches of the right hon. Member for Salford, West and his right hon. Friend the Member for Brent, East (Mr. Freeson),who will wind up the debate for the Opposition. The House will be particularly interested to hear what they would have done if they had been in our place today. If they do not tell us what they would have done, we shall know precisely what significance to attach to their criticisms.
I turn immediately to clause 1, which many hon. Members will regard as the most controversial part of the Bill. In his Budget Statement last June, my right hon. Friend the Chancellor of the Exquer announced the Government's intention to break the statutory link with earnings. At present, basic retirement pensions and other long-term benefits have


to be increased, at least in line with the movement of earnings or prices, whichever is the greater. The main reason why we are amending the law is that, as experience has shown, promise has not been, and probably can never be, matched by performance. Politicians do themselves no good if they enact legislation, and thereby raise expectations which, in practice, when it comes to the point, are not met.
I do not need to remind the House of the events of 1976. Up to 1975, Governments had uprated pensions by reference to the known movement of the index over a past period, the so-called historic method. For the November 1976 uprating, however, they changed the rules and pensions were uprated on the basis of estimating the future movement of the index. In doing so, the Labour Party deprived pensioners of about £500 million in a full year. Had they not resorted to that dodge, pensioners would now be getting about £700 million a year more. That was the first occasion on which the rule was applied, and it was fudged.
As we know, that was challenged in the courts, and the Government won. But that merely underlines my point. The pledge given proved in practice to be flexible.
The case also revealed a second weakness. The Labour Government's Act was so drafted that it is no failure of the Secretary of State's statutory duty if the forecast turns out to be wrong. That obviously worried the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and I wonder whether that is the reason why he has not been invited to take part in today's debate. Last year, the hon. Gentleman wrote to his right hon. Friend the Member for Salford, West and asked him what the Government proposed to do if in January, when the earnings figures for November 1978 became available, they showed an increase above the figure of 12 per cent. year on year—I think he meant 11½ per cent.—on which the right hon. Gentleman and his Government had based their pension uprating.
So impressed was the hon. Member for Perry Barr by his right hon. Friend's reply that he asked him to publish the correspondence in Hansard. It is reported there, in all its loving detail. It is interesting to see what the right hon.

Gentleman said to his hon. Friend. I quote:
Dear Jeff,
There is no set action which the Government is statutorily bound to take, if in January it should be found that the earnings figures for November 1978 show an increase since November 1977 higher than was allowed for in this year's up-rating of retirement pensions."—[Official Report, 17 January 1979, Vol. 960, c. 772–3.]
The same point was made more succinctly by the right hon. Member for Norwich, North (Mr. Ennals) to the National Association of Pensioners. He said:
There is statutory duty to make a forecast, but there is no statutory duty to get it right.
In practice, there is no statutory duty to make up any shortfall. Over the years the pledge could turn out to be worth a good deal less than that promised by the Labour Party.

Mr. David Ennals: Everything that the Minister has said so far is correct, except that the Government in which I was Secretary of State determined and set aside the funds in order that the shortfall should be made up. The Minister has followed that policy. The shortfall was made up.

Mr. Jenkin: The right hon. Gentleman has virtually formed my next sentence. It fell to us and not to the previous Government to make up the shortfall. There is no statutory obligation to make up the shortfall. Therefore, that also represents some derogation from what everyone expected the promise to mean.

Mr. George Foulkes: If the Secretary of State is saying that there is no statutory obligation to make up the shortfall, why is there any need to change the law?

Mr. Jenkin: I shall come to that.
The last of the reasons for change is really the other side of the coin. If the pledge, as people understood it, were strictly honoured, it would not just keep pensioners in line with rising prosperity; it would mean that pensions over a period would rise faster than either prices or earnings, so that the burden of paying for them, which falls on the working population, would mean an ever-rising level of contributions. That was never explained to the people when the provision was put on the statute book.
The Phenomenon has come to be known as the ratchet effect. I am sure that it will be recognised in all parts of the House that it really could not be sustained without any regard to the ability of the economy to pay for it.

Mr. Robin F. Cook (Edinburgh, Central): The right hon. Gentleman is right in saying that there is, of course, a small ratchet effect. That is why some of us think that the present provision is such a good one. If the right hon. Gentleman feels that because of the ratchet effect he has to index-link pensions to only one of those two, why did he not select earnings? It is the rise in earnings, not prices, that measures the general rise in the standard of living, to which he says he wants to tie pensions.

Mr. Jenkin: I should like to be allowed to develop my own argument. But if the hon. Member for Edinburgh, Central (Mr. Cook) is saying that he was in favour of the ratchet effect, can he point to any speech in which the told his constituents that it would inevitably mean, over the years, a higher and higher national insurance contribution to pay for it? I do not suppose that there is one Labour Member who made that point to his constituents. If the hon. Member made that point, he must be in a minority of one.
Is it not clear that if the Labour Government had remained in office, they would have had to do something about this? What is clear is that they were certainly thinking about it. It will be remembered that in the Budget debate last June, I quoted at length from an article in New Society by Mr. Tony Lynes, the then Secretary of State's political adviser. The article was headed "Dear Mr. Jenkin" and it said:
You will have to think long and hard about future increases in benefits.
After pointing out how the existing statutory provision produced this ratchet effect, he went on to propose an alternative formula which, although he saw it as being couched in statutory terms, would achieve precisely the intention of the present Government, namely, that pensioners should be protected against rising prices, and that they should share in the long-term prosperity of the economy.

Mr. Ennals: Whatever an adviser may have written in a magazine—and I recall the present Prime Minister saying that Ministers do not necessarily take the advice of their advisers—I give the right hon. Gentleman an absolute assurance that at no stage had I or any of my colleagues within the Department considered doing what he is trying to do, I hope unsuccessfully, in the Bill.

Mr. Jenkin: Then presumably the right hon. Gentleman, had he been in my position today, would have come to the House and said "No, we intend to stick to this and we shall include a short-fall." He would have had to say to the House and to the country outside that it would mean having an ever-rising share of the national income going into national insurance contributions. Would he have said that? The right hon. Gentleman mutters "Probably". I wonder whether he would, because he has never said so publicly in the House or anywhere else.

Mr. Ennals: I have been accused of muttering. I was not muttering. I was saying that we would have said this. After all, pensioners have started from a low level. We honestly said to people, as a Labour Government—I said it as Secretary of State—that one of the consequences of the measure passed by this House in 1975 would be that over the years pensioners would have a higher and higher standard of living compared with that of the working population—and quite right, too. It was a different measure, but it was in 1975.

Mr. Jenkin: The right hon. Gentleman has fallen absolutely flat into his own trap. What was the 1975 measure about? It was about the second pension, the additional pension, which, of course, would have to be paid for. This is the core of the case. If the working population today is paying not only to maintain the existing level of the basic pension, the real level of the basic pension, to keep up with prices and earnings, but is paying on top of that the contributions to the additional, second, pension, that is a burden that we simply cannot ask the working population to accept.

Mr. J. W. Rooker (Birmingham, Perry Barr): Why not?

Mr. Jenkin: No right hon. or hon. Member on the Labour Benches has ever


said so. [Interruption.] If that is disputed, I look forward to hearing quotations showing where the point was made. What the right hon. Member for Norwich, North said about the 1975 measure is not an answer, because that dealt with the new second pension scheme. We all recognised, of course, that contributions would have to go up to pay for that. I accept that the right hon. Gentleman has said that he would not have considered it, but would the Labour Government, had they remained in office, not have had to change the law? We shall have to wait and see what the right hon. Member for Salford, West has to say about it.
But this Government's commitment is clear. The Bill contains a guarantee for pensioners against rising prices. My right hon. Friends and I have repeatedly committed ourselves to ensure that pensioners share in rising prosperity. Ministers will decide each year, in the light of the economy and of other spending priorities, how to honour this pledge. Our record when we were last in Government shows that, without any statutory requirement whatever, pensions increased by substantially more than prices. I think that hon. Members in all parts of the House will recognise that this is a more realistic, a more honest and, above all, a more sustainable, prospectus.
There is one other minor change in the uprating provisions. At present, the new rates of benefit have to come into force not later than a date 12 months after the end of the previous uprating. This means that the uprating date creeps forward each year. In 1975, it was the week beginning 17 November. By 1979, it had come back to 12 November. By 1980, leap year, it would under the existing law have moved forward a full week to 10 November. I am sure this was never intended, and the Bill gives rather more flexibility to fix the date at which increases will take effect.
I now come to the heart of the Bill, which is the reform of the supplementary benefits scheme, provided for in clause 5 and in schedule 2. The package of measures represents the first stage in the Government's plans for this. As the House will recognise, it has been drawn up in the light of the previous Government's review of the scheme, published as a report entitled "Social Assistance" We have also taken account of the very many comments on the report which have

been sent in by bodies and interests all over the country.
Last year I gave my party's view on the report in the Second Reading debate on the Social Security Bill. I said:
it will fall to the next Parliament and the next Government to carry matters forward in the light of all the comments and suggestions that are made.
Later, I said:
major changes, now badly needed, in our welfare system are being left to be made by the nest Government. If, as I expect, that is a Conservative Government, I and my right hon. Friends will take up that challenge with enthusiasm."—[Official Report, 21 November 1978; Vol. 958, c. 1139–41.]
My prediction proved true and the Bill is our response.
May I, by way of a preface, make a point about a subject that is not in the Bill but to which I know hon. Members on each side of the House may wish to refer? It is the issue of incentives. The Bill is not about the quantum of benefits but about the system. Many of my right hon. and hon. Friends are concerned about the erosion of incentives to work, especially around the cross-over of tax and benefits. They are concerned—and I know that this concern is shared on the Opposition Benches—about the effect of the poverty trap. I understand these anxieties and I share them myself. It has for some years been common ground between the parties that the short-term benefits should be taxed. It was stated in our manifesto as one of our pledges, and the Government are looking at the whole question in the context of incentives and in the context of public expenditure. When we have completed our studies, we shall announce our decisions. However, today it is the proposals in this Bill that we are putting forward for consideration and debate. I have nothing to add to them on that score at this stage.

Mr. Andrew F. Bennett: Is it not very hypocritical of the Government to be attacking people for being work shy when thousands of people search day after day for jobs? Would not the best way of making sure that people did not have disincentives be actually to be providing jobs, not hounding people for being out of work?

Mr. Jenkin: The central point of the whole strategy is that we shall create an economy, and help the people of this country to create an economy, which will


rebuild prosperity and provide jobs for as many people as possible.
I come now to the supplementary benefits system. Reform has become essential if the system is not to collapse in ruins. This was the central message of the review report. It has been said on many occasions by the present chairman of the Supplementary Benefits Commission, Professor Donnison, and right hon. and hon. Members in all parts of the House who are closely in touch with their local offices will know that in many parts of the country the system is under very severe pressure.
It therefore follows that action is essential. I say straight away that our predecessors are to be commended for having set the review in motion. They did so, moreover, as is made clear in the report, on a nil cost basis. That was only realistic. Of course, it is very much easier to promote reforms if there is extra money to ease the transition. Some reforms will have to wait until there is extra money. However, many of them must be carried out and, as the review report makes clear, must be carried out even if it means doing it at no net extra cost to the Exchequer.
Many of the comments made on the report attacked the nil cost basis. Those who are arguing, as I expect the right hon. Gentleman will argue, that we ought not to be proceeding on this basis must explain where the additional money is coming from.
This perhaps is not the moment to rehearse the whole public expenditure debate, but if the right hon. Gentleman is to criticise those parts of the package which he dislikes, he owes it to the House to tell us how much extra money his party would have provided, and where it would have come from. If not, he owes it to the House to tell us how he would otherwise have responded to the report; and if he would have done nothing, would he have just stood by and seen the system collapse before his eyes? The House will listen with some interest to what the right hon. Gentleman has to say.
The keynote of the reform is simplification. The overwhelming message from the review report, and from the response to it, has been that the system has to be simplified.
The simplification we propose takes two forms. First, we are establishing a new legal and administrative framework. The rules of the scheme will be clearer and simpler for all to understand, and the emphasis will be shifted from discretionary payments to payments made under clear rules of entitlement. Secondly, we are proposing to simplify the structure of the benefits themselves. Hitherto, the scheme has rested on an uneasy combination of legal framework and administrative discretion. Responsibility for the scheme has been divided between, on the one hand, Ministers and the DHSS and, on the other, a statutory authority, the Supplementary Benefits Commission.
The principles on which discretion has been exercised have been often obscure and the mysterious "A" code has for years been a target for criticism and for journalistic probing. As a result, claimants rarely know what they ought to get. They are given no written notice setting out their entitlement. Officials operating the scheme have to refer to a huge mass of complicated and frequently changing guidance, which, it has to be admitted, many of them do not fully understand.
In a speech last year, Professor Donnison described the system as
One of unlimited, potential flexibility, and so had to protect itself in practice. In our case, what happens is that demand is restricted and the service is, in effect, rationed by ignorance, delay, squalor, hostility, stigma and in many other ways".
The review report recommended a sweeping change in the legal structure, and that is what the Bill provides.
The revised scheme will spell out a clamant's rights and his obligations in full. The emphasis will move from discretion to entitlement, and the rules will be published in the form of regulations. Decisions on entitlement to benefit of individual claimants will, in future, be taken by independent adjudicating authorities, consisting in the first instance of a supplementary benefit officer, from whom there will be a right of appeal to a local tribunal, and a further right of appeal, on a point of law, to the commissioner. The system will closely resemble that which already exists in the national insurance and industrial injuries schemes. These adjudicating authorities will be entirely independent of Ministers, who will not be able to intervene in any way in their decisions on in dividual cases.
My responsibility as Secretary of State will remain as it is now for the operation of the scheme, and for the management of the staff who run it. What has hitherto been the function of the SBC—that is, determining individual claims, and interpreting the rules—will be transferred to these officials. The SBC has had a substantial policy-making role as well. This will now fall to Ministers. Quite frankly, I do not believe that many people, and perhaps not all Members of Parliament, have fully understood the precise division of functions between the Commission and Ministers. How many members of the public, for instance, have realised that it is not the SBC that runs supplementary benefit offices, but my Department?

Mr. Edwin Wainwright: The right hon. Gentleman speaks of a claimant having to go through the procedure. Could he give the House some indication of the time before the matter reaches the commissioner to get a decision?

Mr. Jenkin: That is a question which it would not really be realistic for me to answer. In some parts of the system there are delays in reaching the final appeal on the national insurance side. I recognise that; but we must look to the structure and see that we set up the system to work it.
I was saying that people did not realise the difference between the function of the Commission and Ministers. How many people realise that in supplementary benefit it is not Ministers who determine much of the policy but the Commission? I believe all this has given rise to great confusion in the past and to some blurring of responsibilities. It has also made the system very muddling for those who have to depend on it.
One important consequence of the new legal structure is that the policies will be set out clearly in a guide, which will be much more easily understood than the present published handbook. It will be issued on the authority of the Secretary of State, and not of a body not answerable to Parliament.
We also intend that claimants should in future be given a written notice, setting out the basis of their entitlement, something which some hon. Members may be slightly surprised to know does not happen automatically at present.
That, then, is the first and perhaps the more important part of the reform. It will mean that the operation of the scheme will be more accountable to this House. The changes have been greatly welcomed by the existing Commission, even though it carries the consequence of its own extinction—a point I shall come to in a moment.

Mr. Frank Field: Before the right hon. Gentleman leaves the main part of the reform, as he has called it, could he say a little more about the body that will be replacing the Supplementary Benefits Commission?

Mr. Jenkin: I shall do so in a moment.
The second area of reform is the simplification of some of the benefits. These changes are, as the White Paper makes clear, complex and detailed and will no doubt be fully debated in Committee. I shall say a word about our aims in constructing the package and about some of the major changes. Again, our first priority is simplification, and I should add that it is simplification not just for the staff who have to run the scheme, but for the claimants who have to know what they ought to get.
Perhaps the most important single change is the proposal to align the supplementary benefit scale rates with their national insurance counterparts, a change which is not only a major simplification in itself but which provides the money to improve the scheme elsewhere.
The existing very small differences between national insurance and supplementary benefit rates have grown up almost entirely by historical accident. I asked for a description of how this came about and I can tell the House that it filled three closely typed foolscap pages; the House will, no doubt be relieved that I do not intend to read them out. Suffice it to say that, over the years, the results of changes in the rates at different times by different amounts are that for a great many beneficiaries supplementary benefit pays a few pence more a week than the corresponding national insurance rate.
We often hear about the many hundreds of thousands of people who are entitled to but do not claim supplementary benefit. Our estimates suggest that many of them are people who are entitled only to some pence extra a week over and above their national insurance benefit,


and it may be that they think it hardly worth claiming.
The Bill therefore proposes to bring these benefits into line. This will result, as has been made clear to the House in a series of written answers, in small losses and some gains by various categories of beneficiaries. However, I must go on to state straight away that these losses will not take place until the next uprating of pensions next November, and will mean that for those people the uprating will be marginally less than it otherwise would have been. The actual figures are about 40p per week for a single pensioner and35p for a married couple. Bearing in mind that pensioners, who are the main group to be affected, have done relatively better than other supplementary benefit beneficiaries in the past, I think it will be seen that this is not unreasonable. Between 1970 and 1977 the real income of households receiving supplementary benefit, most of them pensioners, went up by 12 per cent. For families with children the increase was an average of only 4 per cent.
The resources released by this change are being redirected to help families with children. That was the proposal in the review report, and that is what is being done in the Bill. The reduction in the qualifying period for the long-term rate of benefit from two years to one will help about 98,000 claimants, two-thirds of them single parents, who will gain £5·40 a week from the change. We are simplifying the children's scale rates, and reducing the number of rates from five to three. Three hundred and forty thousand families with half a million child-rent in the age ranges from 4 to 5 and 11 to 12 will gain up to £1·65 per week per child. I should say that all these are current benefit rates.
Another change affecting one-parent families is the earnings disregard for lone parents of £6 and thereafter there is an automatic pound for pound cut-off. I have for a long time felt that this was an awful obstacle to a single parent trying to help to support herself and her children. We are therefore introducing a tapered earnings disregard for single parents, and some 20,000 will gain up to £6 a week. Some, if their earnings remain

completely static between £4 and £8 a week, could lose a little. This change should on balance give encouragement to more lone parents who want to become self-supporting.
There is one other proposal to which I think I should refer, and that is the proposal to defer school leavers' entitlement to supplementary benefit until a fixed date around the beginning of the next school term. The main purpose of this change is to redeploy DHSS staff to more useful work. Hon. Members will know that at the end of each school term, and especially in the summer, DHSS offices tend to be crowded out in some parts of the country with youngsters seeking supplementary benefit on the basis that they have left school and have not got work. Quite apart from the merits of this process, it has made it extremely difficult for staff to cope with other claims as promptly as they should. Many elderly disabled and other disadvantaged claimants find themselves in those periods at the end of very long queues. Around 400,000 of the 640,000 school leavers claimed supplementary benefit last summer and, quite frankly, it is absurd to believe that more than a small fraction of them really needed it.
Indeed, the case for change goes further than that. The Commission commented that the present arrangements tempt youngsters in their first encounter with the social security system to misrepresent their plans about leaving school in order to get benefit. Some young people are being advised deliberately to conceal their intentions. I have here a copy of a leaflet put out by the Claimants Union to school leavers in Glasgow. I quote:
If you say you intend to return to the sixth form or college, benefits may be refused. This is not the law—simply a self-made DHSS rule. If you think you might go back to school or college, it is better to keep this to yourself".
That tempts people to be dishonest. I might add that the leaflet also has a small sketch of school children blowing up their school with a bomb!
Instead of supplementary benefit, parents will get an extension of child benefit through the holiday. There will be full protection for families already receiving supplementary benefit or other social security because, of course, they will still get the addition for their dependants, and that will include any school leavers.

Mr. Allen McKay: The Minister should take into consideration other points of view. There are families, especially in my constituency, the parents of whom have low-paid jobs. Historically, they have always depended on their sons and daughters starting work. In some cases they still do. The proposal will severely penalise these families. Has the Minister taken that fact into consideration?

Mr. Jenkin: I have taken that fact into consideration. I recognise the force of the point made by the hon. Gentleman. I have no doubt that that point will be discussed. There are exceptions to the rules about schoolchildren, for instance for children over the age of 19, young people who have children of their own, and for children who have moved away from home. However, those points no doubt will be considered in Committee.

Mr. Tony Marlow: Is my right hon. Friend aware that supplementary benefit and unemployment pay for those under the age of 21 costs hundreds of millions of pounds? Many Government supporters would prefer that a far larger proportion of that money went to help one-parent families and children in need, who have far greater need of the money than those who receive it now.

Mr. Jenkin: I entirely take my hon. Friend's point. One of the problems that we must deal with—I am not sure that I wholly agree with the comment previously made by the hon. Member for Penistone (Mr. McKay)—is to ensure that young people, many of whom are mobile, actually take the jobs that are on offer. In many parts of the country there are jobs available. People do not take them. That is why we are strengthening the unemployment review officers in our offices and the Department of Employment to make sure that there really is an effective pressure on people to take the jobs that are going.
I referred a moment ago to the Supplementary Benefits Commission.

Mr. Paul Dean: Could my right hon. Friend say a word about the treatment of resources? It seems to me that the discontinuance of the £1 disregard for occupational pensions, and also the disregard for sick pay

from the employer, could mean that some top long-term beneficiaries would be worse off. If I am correct in that assumption, does my right hon. Friend propose transitional arrangements to deal with those cases?

Mr. Jenkin: That is indeed part of the complications of the scheme and why we set out the details in the White Paper. Yes, my hon. Friend is correct. Both of those changes would lead to those people being worse off, other things being equal. But then there are other changes. The matter is extremely complicated. We made an attempt, in a series of answers to hon. Members on both sides of the House, to give our calculations of how many people might be worse off and by how much. However, it is not absolutely possible to state these figures with complete accuracy. There is a whole range of changes. They will affect people in different ways.
I refer now to the Supplementary Benefits Commission. It follows logically, indeed inexorably, from the change in the legal structure of the scheme that the SBC should come to an end. The principal role of the Commission disappears under the Bill and we have concluded that it does not make sense to retain a separate advisory body for supplementary benefits. As the House will know, there is another committee, the National Insurance Advisory Committee, which advises on contributory benefits and on the operation of the national insurance scheme. There is already considerable overlap between national insurance benefits and supplementary benefit, and now that we are aligning their structures it seemed to us sensible to merge these two bodies into a single Social Security Advisory Committee, and this is included in clause 8.
I come now to the point that was made by the hon. Member for Birkenhead (Mr. Field) in an earlier intervention. The committee will be responsible for advising me and also the Department of Health and Social Services in Northern Ireland on supplementary benefits, on the whole range of national insurance benefits and—I draw the attention of the House to this as it is new—child benefit and family income supplement. I think that will be welcomed. Industrial injury benefits will remain within the purview of the Industrial Injuries Advisory Council and we


are not proposing any changes for the Attendance Allowance Board or the Occupational Pensions Board.
I have no doubt whatever that the new advisory committee will be of considerable importance in the development of the social security system. For the first time Ministers and the House will have the benefit of advice from an independent advisory body which spans the major part of our social security system. This was recognised by the Supplementary Benefits Commission itself. In its statement on the publication of the Bill it said:
We see advantages also in the Commission's advisory role being taken over by the proposed Social Security Advisory Committee which we see as an important new body. This will complete the process of integration begun in 1966.
Schedule 3 sets out the membership of the new committee which will include representatives of both sides of industry and the chronically sick and disabled and also of the special interests of Northern Ireland.
We have deliberately defined the role and the functions of the committee in very broad terms. As well as its reporting on draft regulations, Ministers will be able to ask the committee for advice on particular issues and the committee will now have a statutory backing for its advisory role—something which, very curiously, the SBC never had. Apart from that, I am convinced that it would be wrong to try to tie the hands of the committee by statute in any way. The hon. Member for Wolverhampton, North-East (Mrs. Short) has tabled questions about the committee and in my replies I have made it clear that it will be for the committee itself to consider whether, and if so to what extent, it could usefully undertake further activities in addition to its statutory duties.
There is nothing in the Bill to prevent the committee from studying the Department's work and the financial, staffing and practical constraints under which it operates. In one sense, there is a sadness in the ending of the Supplementary Benefits Commission and the National Insurance Advisory Committee. I take this opportunity of thanking not only the present members, but their many predecessors, for all the time, effort, care and skill

they have put in to what is very demanding work.

Mr. Ennals: Yes, indeed.

Mr. Jenkin: I am grateful for the support of the right hon. Member for Norwich, North. In particular—I think that I do this on behalf of the whole House—I give thanks to Professor Donnison for the imaginative way in which he has brought the whole supplementary benefit system out of the darkness into the light. It would be wrong to describe him—I believe that he would not accept the title—as the "onlie begetter" of the reforms in the Bill; many others have played a notable part. But Professor Donnison has certainly been the prime mover, if I may so describe him. For that the House and the country will be most grateful.
Professor Dennis Lees, the chairman of NIAC, is known by many hon. Members to have done an excellent job. I am sorry to tell the House that he is not well at present. I am sure that we all wish him a swift recovery.
I must touch briefly on the remaining parts of the Bill. Paragraph 2 in schedule 1 implements the Government's commitment on equal treatment for men and women receiving social security. For instance, in regard to contributory benefits, a married woman will be able to claim an increase in short-term benefit for her husband and their children if the husband's earnings are less than the increase in benefit being claimed for him. This is intended to cover the so-called "role reversal" cases which are left in doubt under the existing scheme. This should become effective in November 1983.
The second stage under which married women will be able to claim for children, irrespective of the husband's earnings, will become effective in November 1984. I should make it clear that I am talking about contributory benefits that are not subject to a means test.
The Bill contains enabling powers to make regulations that will spell out in detail the introduction of equal treatment in supplementary benefits. Broadly, the changes will enable a woman as well as a man to claim for the couple. Their requirements and resources will, of course, continue to be aggregated. These changes will be introduced from November 1983.
A third heading refers to family income supplement, as to which clause 6 makes some changes which will be welcome to those who have been campaigning for years for more equal treatment under family income supplement. I should add that all the changes are in line with EEC proposals.
Finally, the Bill provides for a number of miscellaneous changes to clarify existing social security law, and no doubt these can be examined in detail in Committee. However, perhaps I should make just one point. Last year's Bill provided for supplementary benefit appeals on points of law. At the time, as the right hon. Member for Salford, West will recall, I argued that this was premature since we were about to embark on the major reform that we have in the Bill. The new appeal right was due to start in January 1980, but we propose that its introduction should take place at the same time as the rest of the Bill, which is next November.
I said at the outset that this was a complicated Bill and I only hope that my explanations have not made confusion worse confounded. The heart of the Bill is the reform of the supplementary benefit system, a reform which simply has to be undertaken now if the system is not to collapse. Though I realise that there are some changes in it which some hon. Members will find unpalatable, I simply have to ask them to recognise that the present state of our economy does not allow us to put in the extra resources which would mean that no single beneficiary would lose. We have tried to make sure that such losses as there are are individually very small. They will be absorbed in the upratings next November and no beneficiary is expected actually to end up with less than he has now.
On the other hand, without this switch of resources, it would have been impossible to make the other modest improvements which simplification must entail. The provisions in the Bill represent but the first stage of the reform. As and when it becomes possible to make further progress, we shall bring further proposals before the House.
The Government are currently studying one of the more important proposals put forward in the review report—the

unified housing benefit. I do not yet know whether it will prove possible to bring this to the House in the near future, but I can assure the House that the matter is in hand.
Other changes, such as the simplified form of claim for the first few weeks of benefit, or the substitution of lump sums for discretionary payments, cannot be proceeded with at this stage, though they will be kept firmly in mind.
I hope that the House will feel that we have made a fair start, and it is in that spirit that I commend the Bill to the House.

Mr. Stanley Orme: This is day 2 of the debate on the Welfare State. Yesterday we had a debate on the National Health Service and today we have a Bill and a debate on the social security system.
The Bill fits into an emerging pattern. It sets the better off against the poor, those in work against those out of work, and the "deserving" poor against the "undeserving" poor. The Secretary of State used several arguments to which I shall return. I wish to refer, as the Secretary of State did, to some matters not contained in the Bill but currently under discussion in Cabinet papers and missives from one Minister to another, on which the House has a right to answers.
We want to know what will be done about the families of strikers. We want to know whether the Minister will break the link with prices when considering the uprating of short-term benefits. Are the pensioners, the sick, the unemployed, one-parent families and the disabled to shoulder further burdens to protect the better off from increased taxes?

Mr. Marlow: That is rhetoric.

Mr. Orme: It is not rhetoric; it is fact. The Secretary of State talked about finding the money for pension increases and benefits, but what the Government are really concerned about is cutting public expenditure so that they can find money for further tax relief.

Mr. Ennals: As my right hon. Friend is asking a series of questions, would he also ask whether the rumour that child benefits are to be frozen as a means of saving public expenditure has validity?

Mr. Orme: I thank my right hon. Friend for that intervention. I shall say something about child benefits in a moment. I want to return to the report in the Daily Mirror recently about a £10 a week levy on benefits received by the families of those who are on strike. The right hon. Gentleman has talked a lot about the family, child benefit and child support. Yet here is a report about a proposal from the Government which they have not refuted in any way. The Government have acknowledged, by their silence, that the report in the Daily Mirror must be correct.
What I find extraordinary is that the letter or minute that was referred to in the newspaper went from the Secretary of State for Industry to the Chancellor of the Exchequer. Where is the Secretary of State for Social Services in this argument? Surely he is supposed to be the Minister in charge, and he should defend his Department. I should like an answer to that question.
On a number of occasions I have said that if the Government make further substantial cuts in public expenditure, the Department of Health and Social Security will have to carry a heavy burden. Nearly one-third of total Government expenditure now goes in cash benefits, as the Secretary of State knows.
The Economist on 1 December advocated the cutting of benefits as a popular way of cutting into Government spending. That article said:
Unless the social security's appetite is checked, the Tories' attack on public spending will go on earning them maximum unpopularity for minimum results.
That is surely the policy of the Government. The Secretary of State referred to the amount paid in benefits. We need an answer from him, because there is an important social point here.
We have always had two buffers to protect us against social unrest at a time of rising unemployment and difficulties with inflation. One is redundancy payments and the other is a reasonable level of benefits for those in need. If we start to interfere with that pattern, we may see that the unemployed will not allow their families to go hungry or to suffer without putting up a fight.
The steel industry is an interesting example. There have been riots in

France. We have got away without that despite the hardship and hard feelings that have been caused, but I warn the Government that they are playing with fire on this important social issue.
The benefit structure may be inadequate but it has met the minimum requirements for the family. If we break that structure, we shall be in difficulty. I say that with all the seriousness that I can command.
The Bill is not a "no-cost" exercise, as the Secretary of State tried to suggest.

Mr. Patrick Jenkin: I was talking about clause 5 and schedule 2. Other provisions will have financial consequences.

Mr. Orme: In other words, the Bill will cost beneficiaries money and the proposed changes in the pension uprating formula and the uprating date mean that the Bill saves money at the expense of the pensioner and other long-term beneficiaries. It is part of the Government's public expenditure cuts.
There is an important omission from the Bill. It contains no provision for uprating child benefit. I am pleased to see that the hon. Member for Woolwich, West (Mr. Bottomley) supports us on that.

Mr. Peter Bottomley: The right hon. Gentleman knows that he has my support on that matter, but may I go back to what he said about the pension increases? If the date of payment of pension increases is advanced by one week every five years, action to prevent that from happening is not taking money away from pensioners, but making sure that they do not get unintended increases. We all want them to get intended increases.

Mr. Orme: I shall come to that point later, because I want to say more about the change of date.
By next April the £4 child benefit will be worth only a little over £3 compared with its value when it was last increased. There was a forecast in The Sunday Times last week that the benefit is to be frozen. But if it is left at its present level it is not frozen but reduced—because of the increase in the rate of inflation. The quotes from Government Ministers about child benefits are too numerous to mention, but let me give a couple of examples. The Secretary of State said


at the 1977 Conservative Party conference:
We must concentrate relief where there are dependent children.
The Prime Minister has said:
We are the Party of the family.
The Under-Secretary of State for Health and Social Security—the hon. Member for Wallasey (Mrs. Chalker)—said earlier this year:
our concern for the family is in no way diminished by the economic situation we in herited…out aim is to…help families much more than they have been helped in the past."—[Official Report, 19 July 1979; Vol. 970, c. 2171.]
Will the hon. Lady stand up and be counted? If nothing is done about child benefit, it will be reduced dramatically.
The families that the Conservatives talk about are having to face increased charges for school meals and transport and a whole range of other services. The family is catching the draught from the Government's policies. Child tax allowances have been phased out, and we all remember the Secretary of State's enthusiasm when he criticised the previous Government for proposing to phase in child benefit over three years. But we introduced the benefit and increased it to £4. If we had been returned to power the benefit would have been increased to £4·50 last month. The incoming Government did not implement that increase, and if something is not done soon we shall see a real reduction in family support.

Mr. David Stoddart: Is my right hon. Friend aware that many families are worse off under the child benefit scheme than they were in 1973, when they enjoyed family allowance and/or child tax allowances?

Mr. Orme: I saw the answer that my hon. Friend received to his question about a comparison between 1973 and 1979. If that 50p increase had been implemented, those families would not be worse off. Without the 50p, some families are worse off.

Mr. Field: As my right hon. Friend is one of the few Members who can speak with pride about his record on child benefits, will he deal with the other vulnerable group mentioned by the Secretary of State, who taunted us by claiming that we would not have been prepared to

defend in the country an increase in national insurance contributions to protect the old? Will my right hon. Friend remind the Secretary of State that the previous Government increased not only the coverage but the rate of national insurance contributions, so that pensioners and other vulnerable groups could share in the increasing living standards of the community?

Mr. Orme: I shall be referring to pensioners later.
The Secretary of State mentioned the measures in the Bill that could be welcomed. The powers for equal treatment, which were agreed under the previous Government, the changes in the scale rates for children and some of the changes relating to one-parent families are welcome, but they are small change compared with the rest of the Bill.
The Secretary of State said that the cost of the supplementary benefit rules changes was neutral, but that does not mean that the numbers are neutral. There will be 1·8 million losers and fewer than 750,000 gainers. One-fifth of all families will lose under the proposal in the Bill.
We welcome the provision that long-term supplementary benefits are to be paid after one year instead of after two years, but against a background of rising unemployment, some of which has been created by the Government, it is disgraceful that the long-term rate is still being denied to the unemployed.
The Secretary of State talks about incentives and the Prime Minister refers to the "Why work?" syndrome as though that explained the economic ills of this country and as though the unemployed were responsible for the fact that the economy is not right. The Government's motto is "If things go wrong, blame the most vulnerable in our society."

Mr. Patrick Jenkin: The right hon. Gentleman is waxing eloquent, but the long-term supplementary beneficiaries, other than the unemployed, receive the long-term rate after two years and we propose that they should receive it after one year. Under the previous Government, the long-term unemployed never received the long-term rates. Why is the right hon. Gentleman attacking us for not doing something which his Government never did?

Mr. Orme: I am placing that against the background of the Government's policy. I am prepared, at this Dispatch Box, to say that it was one of the issues that we were pressing, but one that we did not implement. However, we were not faced with the sort of economic background, inflation rate, and increased unemployment that the present Government have created. We shall see unemployment rising towards 2 million. It is not the time to wage war on incentives, or to undermine hard-won rights to decent compensation and financial protection when a job is lost.
There is an interesting Tory paradox. Through their policies of cutting subsidies, fuel and help, the Government have been reducing incentives. The announcement on milk and vitamins for large families is an indication that those who are in work, who have large families and who are earning are being penalised because they have two children under school age. That is outrageous. What does it save in public expenditure terms? The answer is peanuts.

Mr. Dennis Skinner (Bolsover): All to pay for tachographs.

Mr. Orme: I turn to the extremely mean proposal that unemployed school leavers should be penalised. The gap between child benefit level and supplementary benefit for school leavers is between £7and £10 a week. The Secretary of State told the hoary tale of a leaflet issued in Glasgow stating that some were claiming benefit when they were not entitled to do so. Nobody has stronger views on that issue than I have. If children are returning to school, they have no right to benefit. The right hon. Gentleman is not attempting to close that door; he is closing it completely. Young people in the North-East and parts of Wales and Scotland, where there are no jobs, will be unable to obtain benefit. Is that supposed to encourage the young in our society? They will see that not only are the jobs not available but that there will be no benefit for them. Once again, families will suffer through that change.
I turn to the decision to abolish the Supplementary Benefits Commission.

Mr. Hugh D. Brown: I am sure that my right hon.

Friend will agree that some of the young, especially those struggling into manhood in deprived areas, were encouraged to return to school because there were no jobs available. It is a monstrous position that the Government are forcing on the young in the community.

Mr. Orme: I thank my hon. Friend for enlightening the House.

Mr. Marlow: The right hon. Gentleman has told the House of the problems of families in such areas as the North-East. If someone is in school one day and not in receipt of supplementary benefit, will the right hon. Gentleman explain why on the day that he leaves school his family suddenly requires additional money? My constituents, and most of my hon. Friends, cannot understand that.

Mr. Orme: A young person leaves school at 16 and is available for work. The family has been helping to sustain that youngster by means of the £4 child benefit. A low-income family desperately needs extra support, and many children help to sustain the family once they have left school and are in work. In many instances where youngsters cannot find work families can find themselves below the poverty line. That is what I am objecting to. It is a despicable proposal.
We believe that the abolition of the Supplementary Benefits Commission is wrong, and we totally oppose it. We do not accept the reason for ending the SBC. We believe that it is to be ended because the Government do not wish for criticism from it while they go ahead with their policies of slashing benefits. The body has played a major part in recent years. It is a body independent of Government, which carries out important functions that an advisory committee could not do, especially if that advisory committee had no statutory teeth. Britain needs a body for the poor, especially with the Conservative Party in power. The SBC stands between the Government and the millions that they administer. It takes responsibility for decisions made in its name and shields Ministers from direct political responsibility—from which they should be shielded—for millions of individual cases. The national insurance model, in which decisions are left to local officers, is not appropriate for supplementary benefit.

Mr. Patrick Jenkin: I appreciate that the changes in the Bill are complicated. The right hon. Gentleman has misunderstood the new position. The SBC is responsible for quite a lot of policy and it shields Ministers from policy decisions on which Ministers should be answerable to the House. Under the Bill decisions on the individual cases will be taken by the supplementary benefit officers, who are insulated from ministerial interference. Surely Ministers must be responsible for policy, and that is what we are providing.

Mr. Orme: That is not my interpretation of the way in which the SBC worked when I was a Minister. We found the SBC, at least under Professor Donnison, a worthwhile and important organisation. At times we did not necessarily agree. There are times when independent bodies are good for both the Government and the people.

Mr. Robin F. Cook: Does my right hon. Friend recall that the SBC has made it perfectly plain that it rejected the idea of a no-cost review? Is he also aware that the recent report by the SBC stresses the importance of index-linked earnings? Is it not bizarre that the Bill, which makes the SBC an advisory body, rejects the two most recent pieces of advice that the Government received from the SBC?

Mr. Orme: My hon. Friend has probably put his finger on it. If the SBC were still in operation next year, its report might be an embarrassment to the Government because of the policies that they are advocating.
I raise wider issues. There is still a much greater level of discretion. It is less desirable for local officers to be main arbiters. More is at stake for the claimants of supplementary benefit because it is the minimum level of income needed to live on.
When the SBC is replaced and discretion is drastically reduced, will the new regulations contain a new code similar to the A code covering administrative matters and the remaining discretion? Will it be published? Will there be a chief benefit officer similar to the chief insurance officer? The chief insurance officer issues guidance to his local officers which is not published. Will there be a similar guide to the local SBC

officers, and will it be published? Will all that not lead to claimant confusion? There will be an Act, the regulations, the SBC handbook, the new, slimmer A code and the chief benefit officer's guide. Confusion is likely to abound, not least for officers.
Those are important issues, especially for the new committee. They are questions that need serious answers, and we look forward to the Secretary of State's reply.
I agree that in many ways the Supplementary Benefits Commission is an odd animal. Many people do not understand it. Certainly it is not understood by many outside the House. They have not understood how it worked. Its responsibilities have been wider than supplementary benefits. For instance, it has had responsibility for resettlement homes.
I have a letter from CHAR. It refers to reception and resettlement centres, and states:
Worse still, with the abolition of the Supplementary Benefits Commission, the Bill hands over the running of these Units to the Secretary of State. The present Chairman of the SBC has courageously advocated the phasing out of these places. How does the Government propose to prosecute that policy vigorously with only a Social Services Advisory Committee?
That is a valid question to put to the Government.
There is a suggestion in the White Paper that social services departments should meet exceptional needs payments under section 1 of the Children and Young Persons Act 1969. From where are the local authorities to find the extra money?
The Secretary of State referred to discretion. It is often a vexing, difficult problem within the social security system. It is claimed that it would be simpler, less arbitrary and more open if there were reduced discretion. That may be true. Professor Donnison has been quoted already this afternoon. He is in favour of reducing discretion.

Mr. Patrick Jenkin: He is also in favour of the Bill.

Mr. Orme: Yes, but he said that there must be two vital ingredients if reduced discretion was to be achieved. He said that the first ingredient was a higher basic level of benefits. According to him, the second ingredient is regular, automatic


lump-sum payments. The right hon. Gentleman is not providing those ingredients.

Mr. Jenkin: I thought that I made it clear that that is a reform that we are not able to undertake now. Many of the payments will have to be quantified in regulations. We are not implementing the recommendation to which the right hon. Gentleman refers.

Mr. Orme: That answers the question.
Much will depend on the regulations. It is vital that we are aware of the contents before we consider the Bill in Committee. They must be properly discussed. We must be told how these matters are to be handled. The regulations will be complicated. I note that the Secretary of State is nodding. I take it that we shall see the regulations.

Mr. Jenkin: I said at the opening of my speech that the members of the Committee will receive a paper that will set out how it is intended to use the regulation-making power. That will be done as soon as possible. We shall not be able to do that until we know the Members who are to consider the Bill in Committee.

Mr. Orme: We shall watch that.
The major provision in the Bill is to change the basis of the uprating of long-term benefits from earnings and prices to prices only. The right hon. Gentleman set up a smoke-screen in the Chamber to hide a flagrant breaking of confidence with pensions and long-term beneficiaries. I do not think that they fully understand what is in store for them. If 1974–79 is taken as a base line, pensioner couples are now receiving £5 a week less. If earnings next year move ahead of prices—the estimate is that they will do so by 2 per cent. each year—by the end of the 1980s pensioners will be worse off by over £8 a week. That is the consequence of breaking the link.
What is the Government's reason for taking such a course. Their purpose is to reduce public expenditure. There are 8·5 million pensioners and 1·5 million others in receipt of long-term benefits. They will lose as a result of the Government's action.
The Secretary of State told the House that the incoming Conservative Government met their uprating commitment. The

right hon. Gentleman cannot point to an occasion when a Labour Government have not met an uprating commitment. There is one simple reason for the Government's action, and one only, namely, to reduce public expenditure.

Mr. Anthony Steen (Liverpool, Wavertree): That is a good enough reason.

Mr. Orme: I welcome that interjection. Is money to be taken from pensioners to be given to the better off in our society? Is that what the hon. Gentleman wants?

Mr. Peter Bottomley: I do not want to confuse the right hon. Gentleman with too many figures. However, I ask him to suppose that next year there are wage increases that average 20 per cent. and that following through the year after is a 20 per cent. increase in prices. If that happens, the pensioner will receive a 20 per cent. increase next year, followed by another 20 per cent. increase, even though the general standard of living might have remained at exactly the same level over two years. Is the right hon. Gentleman arguing against that?

Mr. Orme: That is a hypothetical question. When earnings are higher than prices, there is increased prosperity. Increased taxation is drawn from those earnings. It is right that pensioners and long-term beneficiaries should share in the allocation of the additional revenue. That is what I am saying.

Mr. Patrick Jenkin: My hon. Friend the Member for Woolwich, West (Mr. Bottomley) asked a good question.

Mr. Orme: It was a nonsensical question.

Mr. Field: Mr. Field rose—

Mr. Orme: No, I shall not give way.

Mr. Field: Mr. Field rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. The right hon. Gentleman is not giving way.

Mr. Orme: The figures are available.

Mr. Paul Dean: Mr. Paul Dean rose—

Mr. R. A. McCrindle: I follow through the right hon. Gentleman's argument. In November 1976, when earnings increased by 19·4 per cent., the right hon. Gentleman, as


the responsible Minister, satisfied himself with an uprating of no more than 15 per cent.

Mr. Orme: At that time I was fighting a war in Northern Ireland. If the Government think that their system is so good—

Mr. Dean: Mr. Dean rose—

Mr. Orme: I must get on.

Mr. Dean: The right hon. Gentleman has not answered the question put to him by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle). During the period to which my hon. Friend referred, the right hon. Gentleman cannot deny that the then Labour Government consistently failed to match upratings with earnings. The right hon. Gentleman was the Minister responsible for pensions at the time.

Mr. Rooker: That is not true about upratings.

Mr. Dean: Only a few months ago the right hon. Gentleman was trying to explain his failure from the Government Front Bench. How can he change his tune so quickly?

Mr. Ennals: Not true.

Mr. Dean: Is he not a classic example of Satan rebuking sin?

Mr. Orme: Synthetic anger does not fit the hon. Gentleman. He knows that what he has said is not true.

Mr. Dean: Answer!

Mr. Orme: I have made my case.
The right hon. Gentleman said that pensioners will not be left behind. If extra money is to be made available, will it come from the Contingency Reserve? If not, are pensioners to be left with the cost of living index only?

Mr. Field: The answer to the hon. Member for Woolwich, West (Mr. Bottomley), I believe, is that he should not come to the House and confuse money incomes with real incomes in trying to give an example. A more fruitful line of advance would be to compare the record of the previous Administration which, using the formula that is now being destroyed, produced pensions £5 higher

than would have been the case had the Tory formula operated over the same period.

Mr. Orme: That is the central point of the argument that I have been putting. It speaks for itself. The difference is £5.
The uprating date is dealt with in clause 1(3) designed, presumably, to stop the creeping forward that now takes place. But the Bill allows the date to be put back to two weeks next year and a further one week the following year. This can be used as a backdoor method of savings. The sum could amount to £100 million in 1980 and £50 million in 1981. If the Secretary of State makes those savings, as proposed, will he also ensure that the money goes back into benefits? Or will the money go to the Treasury? We are entitled to know the answer.
As my hon. Friends have shown, this is a thoroughly bad Bill. No smoke screen that the Secretary of State puts up can hide the fact. I should like to summarise the questions that I have put. They are important and need emphasising. Are the Government going to break the link between prices and the short-term benefits? An attempt is made in the Green Paper on the sick benefit. What will the Government do about the unemployment benefit and other benefits? Are they going to hit the families of strikers? Will these changes be added as amendments to the Bill during its passage through the House?
I must tell the right hon. Gentleman that if any of these major proposals are put into the Bill at Committee stage or on Report it will be outrageous. They are major issues that would demand a Bill of their own. We want an assurance from the right hon. Gentleman that he is not going to introduce these measures.
Are child benefits to be ignored? When shall we get an answer? We have asked often enough. Not least among those entitled to an answer are the 7 million mothers who claim child benefit as such. I return to the basic point. It will be left to the Labour side of the House to defend pensioners, the disabled, the sick and the unemployed, and one-parent families. We will continue to do so, despite this Bill, for we will fight every line.

Mr. Andrew Bowden: I am sure that we have sympathy for Ministers in the Department of Health and Social Security in the extremely difficult task facing them. The Bill before the House has many excellent clauses. I must, however, tell my right hon. Friend that in this barrel there is one very bad apple indeed. I wish to concentrate my comments not upon the good parts of the Bill but upon clause 1.
On 17 December, in The Daily Telegraph, under an economic commentary headed "Cutting the pensioner's coat to our cloth", it was stated:
Most of the obligations to index were written into law at the end of the 1960s after a decade of exceptional economic growth. At the end of the 1970s after nearly a decade of negligible growth during which there has been a substantial improvement in pensioners' relative position the situation looks rather different.
That it is totally to misunderstand the position in which pensioners find themselves. That article would have been valid if the national insurance pension itself were a sum of money upon which it was possible for a single person or a married couple to live. It is not. The low base figure from which the pension started created an entirely different situation.
Tomorrow's pensioners may be all right. It is today's pensioners who worry me. It is today's pensioners who, in the last 10 years, have suffered excessively. After the failure to solve our economic problems in the 1970s, the House should perhaps ask itself sometimes how we have survived economically. In the last few years, a major contributory factor has been the use of North Sea oil. What we have been doing is to misuse the birthright of our children in order to subsidise standards of living that we are not earning. Throughout the whole of the 10 years, we have been living on the backs of the savings of the pensioners of this country.
We have seen the value of those savings destroyed year by year. Those who have gained, in the House and in the country as a whole, are people in full-time employment. The pensioner who retired in 1970 with £1,000 worth of savings is today well under 80. But what is that £1,000 of savings worth? If he is lucky, it is worth £300. Yet that pensioner

played no part whatever in the economic decline and in the industrial difficulties and problems that we have failed to solve in the last 10 years.
The savings of the thrifty and the savings of pensioners, who worked all their lives for their retirement and who were determined to put away sufficient money to be independent of the State and independent of their families, have been steadily whittled away. My right hon. Friend the Secretary of State is right—I shall give the House some figures—in saying that the statutory rule involving earnings was fudged. However much the right hon. Member for Salford, West (Mr. Orme) may wriggle, he knows that. I must, however, tell my right hon. Friend that it is no excuse to say that because it was fudged and because it was not legally enforceable, we should now do away, with it. What is needed is exactly the opposite. My right hon. Friend should be producing a watertight clause to ensure that a pensioner is protected in the future. I shall enlarge on what I mean.
My right hon. Friend made great play with the question whether the House, or any party, would be prepared to put the burden on the backs of the working population. I maintain that if the issue were explained to the people they would accept the burden. The working population—I use that description in the broadest sense—have been living on the backs of the pensioners for the last 10 years. Savings, investment income and all the efforts of a person who has devoted his life to working hard and preparing for retirement have suffered greatly during those 10 years.
Many pensioners worked for an independent retirement. It will give me no pleasure tonight to vote in the Opposition Lobby against the Bill. Labour Members have betrayed the pensioners many times. They have imposed harsh taxation and created appalling inflation. But, worst of all, having presented the House with a Bill to bring in both earnings and inflation, accompanied by a great fanfare of trumpets and from which all possible political capital was extracted, they then proceeded, not once but twice—and I believe that there would have been a third time if they had been re-elected—to kick those 8·5 million pensioners in the teeth. They broke the link.
When asked about that matter, the right hon. Member for Salford, West dodged the question, but let the House understand the figures. In November 1976 earnings in the 12-month period increased by 19·4 per cent. The pension increased by 15 per cent. In November 1978 earnings within the year increased by 13·3 per cent. The pension increase was 11·4per cent. Those are the facts.
If the Labour Party had won the general election, going by the figures put out during the campaign it intended to increase the old-age pension by 12.8 per cent., but in the period that it was supposed to cover earnings rose by 14.5 per cent. Therefore, the right hon. Member for Salford, West should not attempt to lecture those of us on the Government Benches along the lines that he did.

Mr. Orme: Mr. Orme rose—

Mr. Bowden: I shall give way in a moment. I shall be going into the Lobby with the Opposition, but it will be with great regret and only to show my total disagreement with clause 1.

Mr. Orme: I am following with great interest what the hon. Gentleman said. The point that I made was that a married couple on pension would have been £5 a week better off under a Labour Government than under this proposal.

Mr. Bowden: The right hon. Gentleman is wriggling again. The House would respect him much more if he had the honesty to say that financial resources at that time did not enable the Labour Government to carry out the terms of the legislation that had gone through the House. But the House does not respect those who wriggle and attempt to claim that they maintained the index when they did not. Whatever one may say about clause 1, my right hon. Friend's integrity is unquestioned. I believe him to be wrong, but no one can deny his integrity and honesty in presenting this proposal to the country.
Therefore, I say that all Opposition Members, including the hon. Member for Birmingham, Perry Barr (Mr. Rooker), should hang their heads in shame for the way in which they treated pensioners in the past four or five years. The pensioners will not be fooled by speeches made by the right hon. Member for Salford, West or his deputy.
Between January 1970 and January 1978 the retail price index rose by 168 per cent. Pensioners spend a high proportion of their income on food, fuel and housing. The pensioner index does not include housing. The increase in the pensioner index in that same period was 192 per cent., not 168 per cent.
I ask my right hon. Friend and his colleagues in the Department to consider this matter. I know that I cannot change their minds on clause 1. However, I ask them, when looking at increases in the pension in future, to consider basing it fairly and squarely on the goods and services used by pensioners. A pension increase based only on the general RPI does not truly reflect the costs, expenses and increases faced by pensioners. I fear—not at this time, but in the next few years—that these costs will get steadily worse. We know that because of world prices fuel bills will steadily increase for all of us. Therefore, I hope that my right hon. Friend will feel able to look at that matter when future increases are proposed.
I should like to quote the words of the director of Age Concern England, Mr. David Hobman:
The general trend since 1951 has been for earnings to rise faster than prices, and it should also be pointed out that the General Retail Price Index does not reflect the higher inflation rate experienced by lower income householders.
We are talking about today' pensioners. Those who retire in 15 or 20 years will be in an entirely different situation, but the nation owes a great debt to today's pensioners. They all went through one world war; many went through two world wars. Many had hard and difficult times in the world depressions of the 1920s and the 1930s. Many had to work long, hard hours, in tough conditions. That is why I argue strongly for those people. I believe that Parliament should clearly establish the fundamental right of those pensioners to receive their share of rising living standards in the years ahead.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. Before I call anyone else to speak, I remind the House that even with the 10-minute rule we shall not get everyone in who would like to be called—I am not making any comment about the hon. Member for


Brighton, Kemptown (Mr. Bowden), whose speech was brief—unless everyone co-operates to allow others to be called.

Mr. David Ennals: I am naturally tempted to deal with many points in the Bill but I shall follow your request, Mr. Speaker, and, like the hon. Member for Brighton, Kemptown (Mr. Bowden), deal only with the aged and the retired.
I congratulate the hon. Member for Kemptown on his speech. There were parts of it with which I disagreed and with which I shall not become involved now, but the hon. Gentleman showed great courage. He does so as co-chairman of the all-party committee.
I want to consider what happened a few months ago. During the general election campaign, on many occasions I, as Secretary of State, challenged the present Prime Minister and the present Secretary of State for Social Services to accept or deny that their intention was to do what is contained in clause 1. They would neither accept nor deny it. They would not come clean before the public about their intentions. Certainly they and their supporters accused me, as Secretary of State, of being rumour-mongering and scare-mongering, and the newspapers said that this was one of the listed lies in terms of what would result from a Conservative Government.
I argued then that it was essential that pensioners should share in rising living standards during those years in which living standards were rising and should be protected against inflation during those years in which inflation was at its height. I argued that pensioners should get the best of whichever of the two options was before them. I said that they should not only be protected against inflation but entitled to see their living standards rise when that was so nationally.
I felt that it was right that that should be so. I said that the Government, of which I had the honour to be a member, had no intention of doing what the present Government are trying to do. I think that they are wrong to do it. I believe that most people feel that pensioners started from a low base and that, bit by bit, their standards are improving. I think that the hon. Member for Kemp-

town will recognise that under the Labour Government the real income of pensioners rose by over 20 per cent.
I said that it was my belief that the present Prime Minister was so determined to slash public expenditure that even the elderly, the disabled and children could expect to feel the effect of the chopper. I said that the present Secretary of State for Social Services, if he were appointed to that post, would fulfil it as if he were a Treasury Minister, not a Social Services Minister. My regret is that the right hon. Gentleman has not fought against clause 1.
Therefore, I am right. I submit that the Conservative Party came to office on a false prospectus. If Conservative Members had honestly told nearly 10 million pensioners that as one of their first measures they would take action to under-mine the statutory obligation created by the Labour Government, I believe that that would seriously have affected the result of the election. I believe that that is why they refused to come clean. It is why the right hon. Gentleman refuses to answer my questions and why the Prime Minister refused to answer questions put to her by the present Leader of the Opposition.
Even now I do not think that elderly people recognise those facts. Those who speak for them do. The organisation representing them feels deeply and strongly about this part of the Bill. I believe that there will be revulsion throughout the country when it is realised what powers the right hon. Gentleman is taking in this Bill.

Mr. Patrick Jenkin: Is the apparent unconcern of the large number of elderly people due to the fact that they know that under the last Conservative Government pensions rose considerably faster than prices and because they know that this Government have made a commitment that pensioners will fully share in our rising standard of living? They may, therefore, recognise some of the arguments of the right hon. Member for Norwich, North (Mr. Ennals) as shadow box-in.

Mr. Ennals: I am not shadow boxing. I was interested in the Minister's promise to pensioners. If he meant to keep that promise, there would have been no need for clause 1. It would have


been unnecessary. I believe that the Secretary of State was shadow boxing by trying to pretend to pensioners and to the public that the right that he is consciously taking away from them does not mean that they will be worse off.
My right hon. Friend the Member for Salford, West (Mr. Orme) was quite right to say that if the formula contained in the Bill had been applied over the past five years pensioners would have been £5 a week worse off. We on the Labour Benches will do everything that we can to tell the public what has been done. I believe that there will be a feeling of revulsion, and I hope that the right hon. Gentleman will think again and be influenced by the speech of the hon. Member for Kempton.

Mr. R. A. McCrindle: I had hoped that, after much dissension during the late 1960s and early 1970s, what has come to be known as "pensioneering" was on the decline. I had hoped that both sides would concede that neither had a monopoly of concern for the less well-off in our society. Pensioners are not advantaged by what I can only call partisan "me-tooing". Unfortunately, I have been disappointed in the debate so far and so I begin by placing it on record that I address the House as the first Back-Bench supporter of the Bill.
The principal part of the Bill aims to achieve parity in uprating between unemployment and sickness benefits on the one hand—which at the moment are linked to prices only—and pensions and long-term benefits on the other. At the moment they are linked to either prices or earnings. If for no other reason than simplification there is a case for the principal clause in the Bill. I suggest, however, that it goes much further than mere simplification. The clause removes an expectation that has frequently been disappointed.
Without being unduly partisan, I think that it is fair to remind the House that the Labour Government broke their implied promise on uprating in two of the last three upratings. The figures given by my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) were correct. He might have said that they were admitted by Mrs. Barbara Castle. She made the admission at a press

conference on 8 April 1976, when she said that if the then Government had maintained their formula pensions would have gone up to £16 a week, whereas they went up to £15·30, and that the pension for married couples would have gone up to £25·50, whereas it went up to £24·50.
These are the facts. I believe that as a result of appearing to promise something that Governments do not deliver we are well on the way to making pensioners and other people totally disenchanted with the actions of Government.

Mr. Ennals: The hon. Member for Brentwood and Ongar (Mr. McCrindle) will recognise that, though there were occasions when the objective that was set by the Secretary of State was not achieved, it was taken into consideration in the next uprating. That was so in the case of the uprating for which the Secretary of State is responsible. In the year before that the estimate was based on prices, and prices were running ahead of earnings.

Mr. McCrindle: One might contend, if one wished to be punctilious in argument, that the uprating that we have experienced, and perhaps enjoyed, under the present Government was catching up because of the shortfall under the preceding Labour Administration. If that is what the right hon. Member for Norwich, North (Mr. Ennals) wishes me to concede, I am ready to do so, but I do not think that I can do that without drawing to his attention a quotation in Pensioner's Voice of January this year—when the right hon. Gentleman was still Secretary of State for Social Services—which said:
There is a statutory duty to take these figures into account—which was done by the Labour Government—but no statutory obligation to do it right.
That is the opinion that many Conservative Members hold.
It was held out to the pensioners that there would be an uprating. I have no doubt that that was the intention but it was not done. Having, therefore, made a moral commitment in loose legislative form, it was financially impossible for them to fulfil their commitment. Of such things is cynicism born among the electorate. It is better by far to enact an honest, specific commitment to which Government must conform.
There is nothing in the Bill to say that pensioners should not go on receiving more than is legislatively laid down when financial circumstances permit. I realise that to say that is to lay oneself open to ridicule from Labour Members. The former Secretary of State could do worse than cast his mind back to the period of the last Conservative Government and contrast it with his own period in office. I think that he will find that both Governments did their best within limited financial circumstances to raise the standard of living of the pensioner, so far as that could be done.
That is why I started my speech by saying that I thought that the continuing "pensioneering" did no service to the pensioners and reduced the standing and the reputation of hon. Members. We cannot consider uprating future pensions without thinking of uprating contributions. It is infinitely easy to say how much we should like to give to pensioners—I am as guilty as any in that I have joined in that exercise in the past—but we must keep a fair balance between what we think the pensioners are entitled to expect and what we ask the working population to contribute.
I believe that the Bill is fair to the contributor and fair to the pensioner. It holds out the prospect of our giving more to the pensioner and thus improving his standard of living as soon as circumstances permit. I believe that the principal part of the Bill is moderate. I do not believe that it deserves the denunciation to which it has been subjected, particularly by the right hon. Member for Salford, West (Mr. Orme).
I turn to the supplementary benefits aspects of the Bill. There has been much talk recently of social security scroungers and of making an end to the automatic annual uprating of certain benefits. I am known to have a long-standing interest in social security matters and I would approve strongly of any measures aimed at weeding out abuse of the social security system. I would support strongly the encouragement of those who could work, but will not, to take available jobs. At the same time I remind the House that when we talk of supplementary benefits we talk of the neediest and the poorest section of our community.
I am worried lest the hard-faced approach to abuse, which is correct,

conceals concern for the poor and the need to uplift their condition. I am at one with those hon. Members who are in favour of an improvement in child benefit. However, the only feasible way of doing that that I can envisage in the for-seeable future is to make such an increase in child benefit selective.
Expenditure could be saved by taxing some benefits or ending some automatic increases. I am prepared to agree to those changes provided that, while part of that saving may have to go towards reducing the public sector borrowing requirement, part must also go to increasing the standard of living of the poorest people in our community—people who are worse off than the pensioners on whom we have concentrated most this afternoon. I have in mind in particular one-parent families and large families.
I am an unashamed supporter of the selective taxation of benefits. However, before we reach that stage we must simplify the supplementary benefit system. That is dealt with in what I believe to be the more important part of the Bill. The Bill starts to simplify the system at nil net cost. Some useful steps, which can easily be overlooked if one concentrates on clause 1, are embarked upon in the Bill. An attempt is made to eradicate some of the criticisms that rightly have attended the system.
For example, a statement is to be presented to each claimant with a calculation of his individual benefit. If my surgery cases are typical, that will be welcomed by many beneficiaries. There is to be published a book of entitlements and much less discretion is to be given to individual officials. The five rates of benefit for children will be reduced to three. In itself that is a move towards simplification. Lone parents will be able to retain half their earnings between £4 and £20. At a time of extreme economic stringency these are correct steps along the road towards the simplification and improvement of the supplementary benefits system. They may be small changes in themselves but they are useful. I hope that they will be the foundation for using the social security system to help those in greatest need.
Some people inveigh against scroungers as if no decent people rely on our social security system. My concern about that is mollified by the assurance in the Bill


that care, concern and compassion are not restricted to one side of the House. In that spirit I commend the Bill.

Miss Jo Richardson: I apologise to the Secretary of State and to my right hon. Friend the Member for Salford, West (Mr. Orme) for not having been here to listen to their opening speeches. I was incarcerated in a Select Committee, which began exactly when the Secretary of State began his speech. I was looking forward to hearing those speeches and I feel deprived because I was unable to hear them.
Many people have argued for years for simplification and a real review of the whole social security system. Many of us called for a review of the entire system of inter-related income maintenance, taking into account taxation, housing and other benefits, as well as national insurance and supplementary benefits. The Department's review "Social Assistance" was only a piecemeal attempt to examine one aspect of the system. A great opportunity has been missed by not taking on board the real need to examine the whole scheme.
That is why I and many organisations believe that this is a ragbag Bill. It has been referred to as a "no-cost Bill" in the press and elsewhere. It may cost the Government nothing, but it will cost some claimants a great deal, because they will be disadvantaged by some of its provisions. Reference has already been made to clause 1 and to the effect of the decision not to adopt the Labour Party proposal to link pensions to earnings or prices, whichever is the higher, but to link pensions only to prices. That will be to the detriment of pensioners.
The Supplementary Benefits Commission said that to implement the recommendations following its review would involve a further £200 million and that that would ensure only that claimants were no worse off. The Bill does not propose an increase in expenditure. It will take away from many poorer claimants in order to give a tiny fraction to other groups.
The system needs simplifying, but for whom does the Bill simplify the system? The more that I look at the Bill the more it seems that it simplifies the system for the sake of the Department of Health

and Social Security, but not for the claimants. That is reprehensible because the beneficiaries of a social security system should be considered first.
Much has been said about establishing the rights of claimants. The hon. Member for Brentwood and Ongar (Mr. McCrindle) listed certain rights that the Bill establishes. No one would disagree with the establishment of such rights. However, it is no good giving claimants rights if they result in the claimants being disadvantaged in the amount of money that they receive. In the last month there has been an argument whether it is right to lay down in list form what claimants are entitled to and whether it is right for supplementary benefits officials to be given discretion.
I would be in favour of listing people's rights as closely as possible, provided that the benefits were generous enough to ensure that no one was disadvantaged. However, we now have the worst of all possible worlds. It is a great pity that we shall now lose the safety net of discretionary payments. We shall also see the demise, in its present form, of the Supplementary Benefits Commission. In the last few years that Commission has done much to help people remain above the poverty line.
I turn to EEC directive 79/7, concerning equal treatment for men and women in social security. The Bill purports to enact that directive. However, I draw the attention of the House to the fact that it does not really do that. It does not fully implement the principle of equal treatment for men and women. The Bill apparently improves the position of women, as they will now be able to claim for dependants through the sickness, unemployment and supplementary benefit schemes. However, claimants will be subject to certain qualifying conditions. Those conditions are not specified in the Bill and will have to be drawn up by the Department.
Reference has already been made to the large parts of the Bill that will come into effect by regulation. We do not know what those regulations will comprise, and we shall have little opportunity to debate them. I do not know whether they will be made by affirmative order or whether we shall have to pray against them. Either way, there will be little


opportunity for Back Benchers to make their views known.
There is a good deal of outrage among groups outside the House—one-parent families, the Child Poverty Action Group and other women's organisations—concerning that part of the Bill that deals with equal treatment, because many of the provisions of the Bill will be brought into effect by means of statutory instruments. The EEC directive calls for equality of treatment of the sexes. In my view equality means equality. The Equal Opportunities Commission, in its response to the consultative document "Social Assistance", stressed that nothing less than full equality for men and women under the supplementary benefits scheme would be acceptable.
Part 1 of schedule 1 is entitled:
Amendments relating to similar treatment for men and women".
The word "similar" is used throughout the Bill. There is no reference to equal treatment, only to "similar treatment", but similar treatment does not necessarily mean equal treatment.
I hope that the Minister will assure us that what is described in the Bill as "similar" will actually be real equality.
Although the EEC directive makes particular reference to equal treatment for people in old age, sickness and invalidity, it omits two key benefits. I had hoped that any Government would try to include those two benefits in a new social security Bill. I refer, of course, to the married women's non-contributory invalidity pension and to the invalid care allowance.
Those allowances fall outside the scope of the directive, but a golden opportunity has been missed of correcting those anomalies. They could have been included in the Bill. The argument still goes on about the difficulties that are caused to married women through the operation of the non-contributory invalidity pension scheme and the fact that a married woman cannot claim invalid care allowance. Even when the Bill is implemented, many thousands of disabled housewives and married women who care for dependants will remain in the same disadvantaged position.
The EEC directive also raises the question of who in the family should

claim supplementary benefit. Part I of schedule 2, paragraph 3(b), suggests that certain qualifiying conditions will operate. They will also be drawn up by the Department. No conditions are specified in the Bill, and eventually they will be in the form of a regulation. Perhaps the Minister will tell us whether there will be consultation about those regulations before they are introduced.
Neither Parliament nor the new Social Security Advisory Committee will have control over the content of the orders. The Minister should therefore give an undertaking that before those orders are introduced there will be consultation not only with Back-Bench opinion but with organisations outside. That will ensure that these subjects are being properly dealt with.
There have been discussions about the nominated breadwinner. The Equal Opportunities Commission recommended that a couple should choose which one of them would be the nominated breadwinner. Although there is some substance in the EEC recommendation, and although other organisations also hold that view, there are some disadvantages. It does not take into account the large number of women who are only in part-time work. The concept of the nominated breadwinner does not take into account the changing attitudes within families, whereby the married woman's part-time earnings are taken as part of the family income on a more established basis than before.
There is a growing feeling that a more balanced relationship now exists between partners in a marriage. There is a better relationship between the wage earner and the person who contributes to running the household. If the proposal that there should be a nominated breadwinner is carried out it will perpetuate the bread-winner-and-dependant concept. When we were in government I thought that we were beginning to get away from that concept, which has been decried by many organisations, all of which have an interest in that subject.
The more that one looks at the Bill, the more it gives rise to great anxiety among large numbers of people. Cuts and benefits are shrouded beneath the cloak of tidying up the system, and pensioners will lose possibly as much as £8 because their pensions will be linked to prices only


rather than to prices or earnings. There is no promise to uprate child benefit allowance. All these aspects reveal that the Bill will disadvantage poorer families in the end.
We should throw out the Bill and replace it with one that has had proper consideration and that takes into account not only national insurance and supplementary benefit considerations but the whole wide range of the social security system. If we are to have a new Bill and a new system, let us for goodness sake see that it is a proper system. The Bill does not achieve that.

Mr. David Penhaligon: Since I have been a Member of the House, in every parliamentary Session a Minister has stood at the Dispatch Box and said that he was introducing a social security Bill and that its aim was to simplify the system. My cynicism causes me to doubt whether this Minister will succeed.
Some of the changes sound reasonable, although I sometimes wonder whether the Minister understands the complexity of the problems that the supplementary benefits system causes. Like many hon. Members, since becoming a Member I have written to my local social security officers in the course of taking up individual cases. I pay credit to those officers for the excellent way in which they deal with those letters. That correspondence consists of about 15 letters a week, and sometimes when I post them I am tempted to put them into a big envelope and send them to the Minister. I should do so, not because I expect him to sort out the problems of my constituents, but rather to let him know the amount of correspondence that takes place behind his back about this complicated and bureaucratic system.
I admit to the Minister that I have so little confidence in my comprehension of the details of the system that I will not give my constituents any advice unless I have a letter from the manager of the local office of the Department of Health and Social Security to confirm my view. That advice has been well placed in the past, because on more than one occasion I have written to the local office and thought that I was wasting the time of both myself and the manager, yet I have

received an affirmative reply indicating that all the calculations were wrong.
I believe that we have landed up with the most horrible of systems, and I still take the view that the Liberal Party scheme of negative income tax—others call it other things—is the only long-term answer to this problem. I recognise that this is a complicated matter, and I do not criticise any Government for not solving it immediately. But if only we started along the path, I would be a great deal happier.
The main impact of the Bill on the mass of our constituents will be the change in the base for pension increase calculations. Previously, the base was calculated on inflation or wages, whichever was the larger, but it will now be calculated on prices. I do not believe that this is a good part of the Bill. The clause relating to this matter is enough in itself to persuade my colleagues and me to vote against the whole Bill.
Had the Government explained the ratchet difficulty—and there is a difficulty, so we should not try to kid ourselves—and had they said that the calculation would be based on earnings, the matter would be more understandable and tolerable.

Mr. Peter Bottomley: Will the hon. Gentleman consider the possibility that during the next two years prices will rise faster than earnings and, therefore, that it might be appropriate to retain the calculation on prices?

Mr. Penhaligon: The hon. Gentleman may well be right, but I should be interested to know how many times during the great May experience, through which we all went, he explained to his constituents that, given the election of a Conservative Government, we should see a net and miserable reduction in our standard of living. Clearly, we should have a system whereby, over a period of four or five years, the pensioner can expect to follow earnings increases rather than price increases. I accept that on a year-to-year basis the figures sometimes produce peculiarities and that we can end up in some peculiar situations. However, I am appalled that in general during the next few years all that pensioners can look forward to is a maintenance of their present standard of living, which to my mind is quite disgraceful.
I believe that in x number of years we shall once again have growth in the economy. I do not believe that Britain has reached the pinnacle of its gross national product for all time. But the Bill means that the pensioners of Britain will receive a gradually reducing percentage of the GNP. That is wrong, and I could not support it in the Lobby tonight.
About 2¼ million retired people are on supplementary benefit, and they have a miserable standard of living. I remember that during discussion on the Social Security Act 1975, which was the first Committee on which I ever served—and it was enough to put me off serving on Committees for the remainder of my life as a Member of this House—I warned that the sad thing about the Measure—which everyone other than myself seemed to favour—wasthat it condemned those who were retired and on supplementary benefit to die on supplementary benefit. The way in which the sums of money were taken in, and the way in which they were paid out, meant that there was no real prospect of increasing the base of the pension scheme in real and substantial terms. If one looks at the figures since that Act was implemented, one sees that that is precisely what has happened. There has been no real increase in the basic pension at all, yet that is the only way in which we shall get the mass of those who are currently retired and on supplementary benefit off supplementary benefit.
The reality is that the retired are paying the penalty for our weak economy. All of us must take part of the blame for the way in which we have failed to run the economy successfully. Those with small savings have been robbed. I often look in my local newspaper and read about someone taken to court for stealing £5 and being rightly and sensibly dealt with. I then think of some pensioners I know who have saved about £4,000, who will be robbed because of the system, and about whom not one squeak will be heard. Those are the people who have war loan stock. If ever anyone was conned when he bought something, it was the person who is now retired.
Many retired people also receive small pensions from their companies. In my constituency a lot of former employees

who are now aged 75 were given a pension—a pittance really—of about £2 or £3 a week. At that time it was a useful addition to their pensions, but it still remains £2 or £3 a week. Frankly, they have been robbed.
I cannot understand why the Minister will not say that he will ensure that pensions will at least rise according to earnings. If he gave only a verbal assurance, many hon. Members would feel a lot happier. One of the reasons given for the change was that our working population was not prepared to pay increased national insurance contributions for an increase in pensions. I take issue with that view. Our working population may not be prepared to pay tax for most things, but I am quite certain that it is prepared to pay more tax for an increase in pensions. That is the one public expenditure that can be defended on any platform. In the factory in which I worked it was generally assumed that if people were to have a decent pension it had to be paid for, and it was recognised by the workers that they would have to pay for it themselves. I therefore believe that the Secretary of State was wrong in that assertion.
The real disaster occurred in 1976—the year in which the then Labour Government decided to change the basis for calculating pensions. The change was that in future pensions would be based on the Government's guess of next year's rate of inflation instead of the previous year's real rate of inflation. At the time, I called it the biggest money-saving fiddle of all time, and I stand totally by that view. Frankly, the sheer magnitude of that change puts the present proposal in the shade. That was a disgraceful thing to do, and the shenanigans of Labour Members who pretend that they never did it are a disgrace.
By definition, Governments are bound to under-guess next year's rate of inflation. How can any Minister announce next year's pension increase and say that pensions will be increased by 20 per cent., when he knows that inflation will rise by 16 per cent? That means that pensions are increased by 4 per cent. We all know that with his lovely, straight face, to which we have all become used, he must say that he is sure that inflation is about to come down and that it will be only 10 per cent. It was crazy to change the


calculation to next year's guess at the change in the rate of inflation, yet that is what the Labour Government did. As perhaps the only neutral Member in this House, it is only right that I point that out.

The Minister for Social Security (Mr. Reg Prentice): Perhaps the hon. Gentleman will note that our "guesstimate" for this November was 17·5 per cent., and that the actual figure was 17·4 per cent.

Mr. Penhaligon: When we see how the "guesstimate" goes for the next 12 months we shall be able to judge.
What do the Government intend to do about the graduated pension contributions? Shall we ever reach the stage when graduated pension contributions will be adjusted to take inflation into account? The "won't work" problem really does exist. Certainly in rural areas the "won't work" or "not very keen to work"—or as I sometimes put it "stupid to work"—philosophy exists. The rural areas in my part of the country are among those with the lowest earnings. People who live in villages earn the lowest wages. I have to tell London continually that the rural areas of Cornwall or Wales are not as rural areas are regarded in London. If one is really successful in London, one goes to the rural areas, buys a fancy house and commutes to London.
The really poor people are those who live in the villages of the remote areas of Britain. The Government propose to charge them for sending their kids to school. They intend to charge an economic price for school meals, and they say that help towards those two items will be limited to FIS and supplementary benefit. I cannot think of anything that has been done for a long time that will increase the "stupid to work" problem more.
My final question concerns child benefit. I believe that it is one of the most useful benefits, but I wonder why the Government have never considered taxing it, which would enable the sum paid out to be increased by about 25 per cent. to 28 per cent. It would give a real increase in income to those who pay no tax. If a little extra money could be afforded, the system could be such that

no one with a taxable income of less than £6,000 a year would be one farthing worse off through the change. Those with incomes in excess of £6,000 a year are, quite frankly, capable of bringing up their children on their own. I have never understood why the idea of taxing child benefit was not considered, and I ask the Minister whether it is possible now.
I am a little afraid to suggest it in case the Government tax child benefit and do not increase it at the same time, but a genuine transfer of disposable income from those who are well off to those who are really poor could be made through such a scheme. If it is rejected, what shall we do about child benefit? It should be included in the Bill whether it is tied to prices or to something else. The loss of a steadily increasing child benefit in a period of inflation will genuinely erode the living standards of poor families, and it is those families that the House has the main responsibility to defend.

Sir Brandon Rhys Williams: We have had much party controversy in the course of the debate, although the opening speeches from both sides were deeply sincere. In spite of the fireworks, the House is united in a profound sense of shame about the present position of the British Welfare State. We know that there is not enough money for people in need and that our pensioners, large families, one-parent families and the disabled are not getting the level of income that we should like.
There is a serious problem before us, and I quite understand why the House is anxious, particularly about the provisions of clause 1, which appears to be abandoning the aim of slowly increasing the amount of benefit by the operation of the ratchet. I never liked the ratchet, because it did not seem to be founded on any principle.
I have often tried to draw attention to the need to analyse the nature of beneficiaries' entitlement, so that we can decide what the moral commitment of society is to pensioners and others in receipt of national insurance benefits, supplementary benefit, earnings-related benefit or whatever it may be. I do not believe that one single rule is the right one, and we need to look into the matter much more deeply.
Where we are dealing with entitlement based on contributions, the benefits need to move with the flow of contributions. Where earnings-related benefits and national insurance benefits are concerned, the right system is that they should be linked to earnings. Where the root of the entitlement is citizenship—and the obvious example is child benefit—there again, the income comes from the taxpayers' contributions and is related to earnings, and the benefit ought also to be related to earnings.
The third major category of benefits is supplementary benefit, where the entitlement of the recipient is derived from his need. The money is paid by society as an act of compassion because we cannot allow anyone in our society to have less than a minimum standard of living. Therefore, for supplementary benefits the appropriate uprating principle must correspond to prices.
In the Bill an attempt is made to choose just one part of the ratchet and tie the entire structure to that, but I do not believe that that is the appropriate way to do it. The first clause should be split, so that basic national insurance benefits and child benefit should continue to be related to earnings on the principle known in France as "repartition", worked out at a time of high rates of inflation in France after the war; but supplementary benefits should be related to needs—that is to say, to prices—so as to provide a minimum income guarantee.
Such a split would result in the basic rates of benefit drifting apart and might mean that needs-related supplements came to more than the basic allowances, as indeed they used to in the early days of national insurance when the national insurance pension was regarded simply as a help in old age and not by any means as a minimum income guarantee.
We must see the attraction of fixing identical rates of benefit, as the Secretary of State is hoping to do, whether in supplementary benefit or in national insurance. However, it is doubtful how much that means when such a large proportion of those dependent on supplementary benefit are paid additional allowances for rent, which varies greatly from one part of the country to another. While so many recipients of supplementary benefit have

separately assessed rent allowances, the idea that the rates of benefit for national insurance and supplementary benefit are identical is an illusion, and I wonder whether it is worth pursuing at present.
My right hon. Friend mentioned studies into the possibility of a unified housing benefit. Professor Donnison has made a particular study of that matter. I am greatly concerned about that, since if we could achieve a fair system of unified housing benefit, we would be taking an enormous step forward in the abolition of casework and be taking the most constructive step we could towards the abolition of the means test almost altogether—which is an extremely desirable objective.
I have often sought to draw attention to the need to probe the provision for household costs in the total structure of benefits. I am still in doubt as to exactly the reasons for the relationships in national insurance between the allowance that we give to a household consisting of only one person and the allowance that we pay to a household consisting of two people. It is obvious that there is a common element in the figures, but I do not believe that there is any serious thought behind the determination of what that common household element should be.
In the meantime, we have to recognise that, if basic benefits were related to earnings, as I am suggesting, they might even fall in 1980. We have worked ourselves into such a state of gloom about our economy that our prophecies will be self-fulfilling, and we shall talk ourselves into a recession, as we did before the war. One of the things that we have to fear is the fear of recession itself, which is making people so nervous about investment and future plans.
If there is to be a fall in the total level of the nation's earnings in real terms next year, my right hon. Friend is right not to try to relate benefits to earnings. That would result in an actual cut in the standard of living for those on very low incomes, and we would all be extremely loth to allow that to happen.
That leads me to make a comparison between the treatment of pensioners in this country and in certain other major industrial countries. I have been able to procure figures that I believe to be broadly correct, which show the way that a man


and wife in retirement are treated in several other industrial countries. The comparison is an unfavourable commentary on the way in which we treat our pensioners in the United Kingdom, both in the way our pensioners' incomes are related to the national average wage and in the absolute level of benefit.
Internationally, if we take the net income of a retired man and wife, after allowing for tax, and compare it with the net income of a man and wife before retirement, it can be seen that in Germany the pensioner's income falls to about 60 per cent. of the national average wage, in Italy to about 70 per cent. in Holland over 60 per cent. and in Belgium to 78 per cent. Belgian pensioners do very well by comparison with the Belgian national average wage. However, in the United Kingdom, the figure falls to only 45 per cent. That represents a heavy drop in the spendable income of a pensioner couple in this country.
In terms of absolute values, the figures in this country are also unfavourable. The pension paid for a couple in this country on the basis of purchasing power parities is less than half the Belgian rate, 60 per cent. of the West German rate and 20 per cent. less than the Italian rate—even though the Italians are agreed to have a low standard of living. The figures that I have quoted relate to October 1978, but I believe that they are still true today.
The House is unanimous in wanting to find ways to increase the total level of pensions and to encourage the Government to increase the basic rate of child benefit. If we cannot raise the rate of child benefit for all children, we should try to do it for the second and subsequent children at least, and for the children of one-parent families. This Government are interested in creating incentives. By far the most rational and merciful way of increasing the incentive to work is to increase the level of child benefit. The benefit is paid for children whether the parents are employed, unemployed, in work or sick. The more the fall in the rate of receipt of benefit is diminished, when a man returns to work, the more effectively we solve the problem of disincentive and the poverty trap. I hope that the House will unite in continuing to press the Government to find the earliest opportunity to increase the rate of child benefit.

Mr. Field: The hon. Gentleman is saying that there is a need to increase the incentive to work in a civilised way and I agree with that. However, I am puzzled by his suggestion that child benefit should be increased for second and subsequent children if it cannot be increased for all children. Given that the majority of poor families are small, with two or fewer children, would it not be more sensible, if he is thinking of that form of selectivity, to increase the benefit for the first child only?

Sir B. Rhys Williams: That would depend on the problem that we are trying to meet. If we are dealing with the poverty of families it is true, as the hon. Genleman says, that small families may be in great need: it is not only the large families who are in need. However, if we are trying to minimise the effects of inflation, in so far as it damages large families more than small families, the second and subsequent children must be thought of first.
I have often said that when the price of bread, cheese, meat or another household necessity that is required by each member of the family, goes up, the large family is hit much worse by inflation than the single-person household or a couple. In one case, the housewife has one or two plates to cover with food, whereas, in the other case she may have five or six. Price rises in food are much more devastating for the large family than for the small family.

Mr. Marlow: Of course, we should remember that disadvantaged families with only one child are largely one-parent families. Although none of us would wish to see anything taken away from such families, it may be pointed out that they receive more for the first child than do other families.

Sir B. Rhys Williams: These are contentious points. I should speak for much longer than 10 minutes if I tried to explain how I would deal with all these problems. As far as one-parent families are concerned, I should like to see the household element increased. For those families the element of support for the household is missing. Mothers particularly need household support when they have to try to raise children on a limited income and are unable to earn because of their responsibilities to the children.
I respect the Government's desire to reduce the burden of taxation, particularly at the marginal rate of tax. There is not much that could be gained by a further increase in VAT or other indirect taxes for our purposes. There is scope there, but not enough to do what we want for pensioners and families. Therefore, I should like to make a specific suggestion as to how the money can be raised.
I believe that the personal allowance is much larger than it needs to be for those with no responsibility for household outgoings. I am thinking particularly of teenagers who live at home and the earning wife in a two-income, two-person household. We all know that many people in our constituencies are badly off. Yet, we have only to open any of the national daily or evening newspapers to see whole-page advertisements for Japanese trash and imported luxuries. People are obviously buying such items, otherwise the firms would not be able to insert such enormous and costly advertisements in the newspapers week in and week out. Evidently, there are people who can be tempted to spend some hundreds of pounds on stereophonic speakers, new developments in colour television and on television games and we should recognise that some people in society have much more money than they know what to do with.
At the same time, plenty of people cannot make ends meet in the attempt to keep their children and wives in decency. I believe that this area where money is going to waste and is sucking unwanted imports into the country is paid for by the large personal allowance.
Ideally, I should like to see a unified housing benefit introduced for householders, whether as income taxpayers or in receipt of benefit, as a positive tax credit. However, I recognise the administrative difficulties of a system of that sort in the short run. Therefore, I suggest that we should reduce all personal allowances by a substantial amount.
We should also make good the loss of net spending power after tax to householders by making rates deductible from income for tax purposes. In that way, we could restore to householders what they lose in the reduction of the personal

allowance, but, at the same time, we would retain an enormous amount of money in the tax system. That money could be spent on such objects as increases in pensions and child benefit.
The advantage of this scheme is that there would be no disincentive effect through an increase in marginal rates of tax. The marginal rates of tax would remain the same. Also, direct help would be given to householders and indirect help would be given to the local authorities. That would be a most democratic system for helping local authorities, because the individual ratepayer would be in a better position to meet the payment of his rates, yet he would only be getting support for local government to the tune of the 30 per cent. which would be the amount that he would gain from the recovery of tax.
Help could be given to families under this scheme, but there would be less for the household with which I have little sympathy today—the two-person, two-income household. It is an element in our social structure which is doing particularly well. One thing that young newly married couples who are waiting to start a family fear is the sharp loss of income when the wife has to give up full-time work. Under the system which I am recommending, that contrast would be alleviated. The second earner in the household would not be taking home so much in the first instance, and when she decided that the time had come to start a family, she could look forward to a compensating child benefit to make up for the loss of her earnings. It would also bring pensioners closer to the level of the rest of the population.
I think that there is the will in Britain to do something of that kind. The Government must put it into effect. I hope that the Bill will not be the final word of the Government on the matter. I recognise their difficulties, and the problems which they have inherited from the previous Administration. Even when the Bill is passed, the House will still not be satisfied. It must not be the Government's final word on social security.

Mr. Deputy Speaker (Mr. Richard Crawshaw): From now until nine o'clock the 10-minute rule will apply. I hope that hon. Members will time themselves to save the Chair having to intervene.

Mr. David Stoddart: I listened with great interest to the remarks of the hon. Member for Kensington (Sir B. Rhys Williams). I am sure that there are many suggestions of which the Government and the House will wish to take account in the future. However, I shall not follow the hon. Gentleman further than that.
The Bill clearly worsens the position for many people, although it improves it for others. The position is obviously worse for pensioners. The right to share increased standards of living which they enjoyed previously by Act of Parliament is to be replaced by a system of uprating over and above the cost of living which will be completely at ministerial whim. If experience is anything to go by—one has only to look at the figures—they are in for a bad time. Under the Tory Government between 1970 and 1973 the position of pensioners relative to the rest of the community worsened. Under the previous Labour Administration their position improved.
There is provision in the Bill to deal with the position of strikers. My right hon. Friend the Member for Salford, West (Mr. Orme) mentioned this in his opening remarks. Judging from newspaper re ports—especially the report in the Daily Mirror—the Government are considering further penalties against strikers and their families. It is indicative of the Tory attitude towards ordinary working people that the Government are even prepared to consider treating strikers more harshly than murderers, rapists and thieves. They are prepared to spend £100 a week to feed, house and guard criminals and look after their families into the bargain. But decent law-abiding men, who are merely acting to safeguard or improve their conditions, are apparently to be pauperised and starved into submission.
It is assumed by the Government that men on strike are always at fault. It never occurs to the Government that the employer may be a bad employer and may have driven his workers out on strike. What are they prepared to do to penalise bad employers who are seen to force their workers out on strike? The position is very one-sided.

Mr. Marlow: Mr. Marlow rose—

Mr. Stoddart: I urge the Minister to take that into account, to urge his ministerial colleagues to get off this apparently popular bandwagon, and to look at the matter in a reasonable, sensible, humane and democratic way. They should leave strikers alone, and retain freedom of action in the country—

Mr. Marlow: Mr. Marlow rose—

Mr. Deputy Speaker: Order. The hon. Gentleman is making it clear that he does not intend to give way. I shall allow him another minute to compensate for the intervention I am making. In a 10-minute speech, some interventions are almost of that length.

Mr. Stoddart: I am most obliged, Mr. Deputy Speaker, particularly since you will allow me injury time.
I wish to comment on child support. Many hon. Members have raised points about the subject. It is one of the most important problems facing us at the present time. When in Opposition, the Secretary of State for Social Services and the pretty and charming young lady who is now Under-Secretary of State for Health and Social Security, for ever pledged their commitment to family support and to the child benefit system. I have read with interest some of their criticisms of the Labour Party.
However, since taking office they appear to have changed their tune pretty quickly. They should have increased the child benefit in April and November of this year. Their failure to increase child benefit is disgraceful. In our society at present families with children are the poorest. There is no question in my mind but that that is the case. The more children there are in the family, and the older those children are, the poorer the family is.
What is more, many of the public expenditure cuts will hit families hardest. In my constituency the school meal charge will go up next April. It is being raised by the Wiltshire county council to 45p. That is an increase of 50 per cent. The county council, in accordance with the Education (No. 2) Bill, will restrict free meals. Half of those children who now enjoy free school meals will no longer enjoy them. Their parents will have to find an additional £2·25 every week for each child, if the children are to continue


to eat school meals. School transport charges will also go up. In the last Budget, VAT was raised. Families are being hit hardest. They received the least tax relief, and they have not been compensated in any way by the increase in child benefit.

Mr. Field: Is there any Government measure that my hon. Friend can think of that helps families, rather than penalises them?

Mr. Stoddart: I do not have much time to think about it, but I can think of nothing that the Government have done since they have been in office to assist families. Everything that they have done penalises families.
I refer to the answer given by the charming Under-Secretary of State for Health and Social Security on Tuesday 11 December, when I asked her the value of child benefit now, expressed at 1973 prices. She said that it was £1·56, based on the retail price index for October 1979. At 1973 prices the value of child benefit now is only £1·56. Following that answer I conducted a little research. I looked at one or two families and tried to work out what they would have received in 1973 by way of tax relief, family allowance, or both.
I am glad to note that the Under-Secretary of State is now with us. Her presence brightens up the Front Bench considerably.
Taking account of tax allowances, and the standard rate of tax for 1973–74, which was exactly the same then as it is today, this is what I found. A family with a child over 16 received £1·53 in 1973, as against £1·56 now. Parents of a child between 11 and 16 received £1·35 in 1973, as against £1·56 now. Parents of a child under 11 received £1·15 in 1973 as against £1·56 now.
But what is the position of a fairly typical family, with one child of over 16 and one child between 11 and 16? With tax relief and child benefit, that family received £3·22 in 1973, as against £3·12 today. The standard rate taxpayer who has one child over 16 and one child between 11 and 16 is worse off by 10p per week. A family with two children over 16 and two children between 11 and 16 would in 1973 have received £6·78, as against £6·24 now.
The position of many families under child benefit has worsened considerably. What is more, the older the child gets, the worse off the family becomes. That is obvious, for as the children become older they need a lot more food. They have to be clothed every six months—

Mr. Deputy Speaker: Order. The hon. Gentleman has now had more than 11 minutes. Mr. Anthony Steen.

Mr. Anthony Steen: Any debate on the question of supplementary benefits inevitably provokes very deep emotions, but it is quite wrong and quite inexcusable for the Opposition to portray themselves as the sole champions and defenders of the poor, the underprivileged and the disadvantaged. On the Conservative Benches we care deeply about these people, and I remind Labour Members that there is as yet no State monopoly of care and compassion.
The questions that arouse such strong feelings are: how much should the State pay to those who cannot cope, and how should we administer the organisation that pays the money out? On the Conservative Benches we are determined to see that there is an adequate safety net protecting every member of our society from the indignity and the hardship of poverty. We are not the exploiters of labour—the ruthless owners of the dark, satanic mills.
I speak as a former social worker and community worker. I worked for 15 years in the poorest parts of the country with the old and the handicapped, and I am still involved actively in the care of the old and the lonely. I wonder how many Labour Members are involved in this sort of work, or know very much about it. We are deeply concerned, and our record bears it out.
In the short time available I want to concentrate on those aspects of the Bill that will help those on the lowest incomes. In the past, people eligible for supplementary benefits have often not understood the complicated process by which their allowances have been calculated. That was not ignorance on their part; it was due to the complexity of the system, coupled with the very wide discretion given to the officers. This can be seen by looking at what happened to those


who claimed between 1967 and 1968, when exceptional need payments rose from 386,000 claims to 1,199,000, and exceptional circumstances payments claims rose from 594,000 to 1,666,000.
The Bill should ensure that the money gets to the claimant more quickly and that he knows why he is getting it and how it is being calculated. In the past, claimants often felt that they were deprived of something to which they were entitled—hence the Claimants' Union movement that sprang up. The position will now change. They will know exactly what they can claim and why they are entitled to it.
While discretion allows flexibility, unfortunately it is often seen more as a device that individual officers use to avoid making payments. It is because we care about the needs of the poor that the Government have taken this important step, but we must be careful that rigidity does not replace flexibility. The supplementary benefit has always been individually tailored to the individual's needs. That must remain. Will the Minister feel able to say something in reply about the need to maintain a measure of discretion and to deal flexibly with cases that do not precisely fit the rules?
If the changes proposed in the Bill are really to benefit claimants and to get to those who need help most, sufficient resources must be provided to ensure that those who are entitled know about the benefits. The previous Labour Administration always made a great deal about the benefits that they were giving to the disadvantaged, but failed to mention that they knew full well that the take-up of these benefits would be extremely modest. Will the Minister there fore ensure that sufficient resources are made available so that information reaches the widest possible audience?
One way of doing this is through the visiting officer, who plays a crucial part in the supplementary benefits system, providing a direct link between the claimant and the local office. However, the previous Administration substantially reduced the numbers of visiting officers, and this in turn weakened the link with those who most need care. Will the Minister, in his reply, say something about this and about the need to retain an adequate number of visiting officers?

Without these officers, many of the excellent provisions made in the Bill would be less effective. Two examples come to mind of Acts of Parliament passed in the last nine years which have had limited effect because of inadequate resources—the Chronically Sick and Disabled Persons Act 1970 and the Children Act 1975.
That the public is well served by the Department's staff needs to be said. The principal difficulty relates to the need to find experienced counter staff, for they are the people who deal face to face with the public. Youth is often seen by claimants as being equivalent to inexperience. There is often a level of resentment when a young man turns down a claim. There is a strong case for seeing that those who deal with the public are not always the lowest paid. Why is it that those who perform the basic tasks of dealing face to face with public are usually on the bottom financial rung of the ladder?
There are those who prefer to deal with the public but who feel obliged to seek promotion in order to earn more and who take on some administrative task. The teacher seeks to become a headmaster. The social worker seeks to become an area administrator. The supplementary benefits clerk needs to go behind the scenes in order to earn more. There needs to be a greater overlap in pay structure, so that those who wish to continue to deal with the public face to face can do so without suffering financially. A large number of mature counter clerks would go some way to inspiring confidence among those whom they are serving.
The Minister should also have regard to the deep-felt concern of staff in local offices that the new legislation tends to put heavy duties on them without providing extra resources. While it is right for productivity to increase in some areas of social service, it is difficult always to provide satisfactory criteria for performance. Has the Minister considered the staffing implications of offering every claimant, as of right, a detailed statement of his entitlement? Has the Minister allowed for this in his calculations?
Most of the social service officers in the DHSS deal not just with supplementary benefit but with a wide range of schemes offered by the Department


involving sickness, old-age pensions and unemployment benefits. The proposal that the Supplementary Benefits Commission should be disbanded and replaced by a new body that covers all the schemes raises a number of questions, not least whether the new body will enjoy similar independence to that enjoyed up to now by the Supplementary Benefits Commission. Will the Minister make sure that the Government do not over-centralise the new agency and limit its freedom?
The Bill is a useful forerunner—we hope—of other Bills to ensure that those who are genuinely entitled get the benefits. There are faults in every organisation today, and faults will creep in, but I am sure that the scale of fraud is greater in Inland Revenue than in the Department of Health and Social Security. But people on supplementary benefit are less educated and less sophisticated, and the sums of money are far smaller. Understandably, though, the public are resentful when those with larger families, with three or more children, are seemingly entitled to weekly payments that far exceed the basic wage of a working man. The Government need to consider whether they can insert in the Bill at a later stage a device for dealing with anomalies.
Finally, I want to say a word about those who, I believe, misunderstand that nature of supplementary benefit and believe that it is only for those who sponge off the State. A vast majority of people want to help themselves and earn their living. They do not believe that the State should prop them up. They want to fend for themselves. However, in any Western society there will be those who are weaker and more vulnerable. In the United States the contrast between the very rich and the very poor is disturbing. In this country the range is far less. There is none of the grinding poverty that one sees in the large American cities.
The Welfare State, however, plays, and will continue to play, an important part in our way of life. I am certain that supplementary benefit needs to be applied compassionately, but also with a measure of flexibility. Whilst it should not rob a man of his sense of achievement or discourage him from working, it should be there to provide the basic requirements for life. One way of ensuring that it

does this is to consider taxing unemployment benefit while at the same time providing larger child benefits. I believe that the Bill is an important first step to the simplification of a complicated system. There are many good things in it and I welcome it.

Mr. J. Enoch Powell: I take part in the 10-minute scramble only to refer to certain Northern Ireland aspects of this Bill, for although only six of the clauses of the Bill are directly applicable to Northern Ireland, the whole Bill must under the principle of parity, which I am sure is here the case, in due course—and I hope as promptly as possible—be applied exactly in the same way in Northern Ireland. This will take place, curiously enough, partly by Bill in this House, as a Social Security (Northern Ireland) Bill, and partly by order.
I spare a moment to say that that anomaly is surely indefensible and that if we are enacting a code—this is an increasingly coherent code—of social security for a part of the United Kingdom, and indeed for the kingdom as a whole, it ought to be enacted in the same way, enacted as a whole and enacted in the proper manner by this House. Incidentally, I am sorry that, contrary to practice, it has not apparently been possible for a representative of the Northern Ireland Office to attend any part of this debate.
I come to the six clauses, and they are important clauses—clauses 8 to 14, with the exception of clause 10—which apply directly to Northern Ireland. My hon. Friends and I are strongly in favour of what is proposed in these clauses. They believe that the substitution of a comprehensive advisory committee for the separate advisory bodies, and the substitution of that body for the two separate Supplementary Benefits Commissions, is wholly logical and wholly beneficial.
It was always absurd that under the principle of parity, applying presumably the same principles in the same way in Northern Ireland as in Great Britain, there should be a separate Supplementary Benefits Commission for Northern Ireland. I make no criticism—that will be well understood—of the method in which it did its work; and all my colleagues representing Northern Ireland


seats can testify to that. Nevertheless, it is clearly right that we should now have this one body for the whole United Kingdom, securing both uniformity and fairness throughout the Kingdom, and also that co-ordination between the different forms of social security, which will now be within its reach.
It will have the duty, in quite a new sense, of advising Parliament; and I want to invite the attention of the House a little more closely to clause 9, in which it is given that task. Under that clause, whenever proposals are brought forward which fall within the social security area, the House will have to have placed before it the view of this independent committee. That is wholly good. It will certainly increase the information of the House and it will increase our powers of judging and controlling what the Government are proposing; but there are a number of defects which ought to be put right.
In clause 9(2)(a) there is an exception for urgency. I do not dispute that there may be circumstances in which regulations and provisions have to be brought forward by the Government so urgently that the views of the committee upon them could not be obtained in time to comply with the provisions of this clause; but I cannot think that that is any reason why the House should not have the opinion of the committee on what is done. After all, we do not just stop when the emergency measure has been taken. It forms part of the social security code; and it is just as necessary for this House to have the advice of the committee upon what has had to be done under the emergency provisions as upon what is done in a more leisurely fashion. I hope, therefore, that the Government would agree that although the time scale cannot be kept in the case of urgent proposals, the House should nevertheless still, in those cases also, have the views of the advisory committee.
Then I come to the predicament of Northern Ireland. It might appear to the cursory—and why should he not be cursory?—Great Britain student of clause 9 that Northern Ireland is protected in the same way as the rest of the kingdom by having the advantage of a report in respect of Northern Ireland from the committee. I am afraid that that is not the case, and for a quaint and objection-

able reason. It is only where proposals are laid either before Parliament or before the Northern Ireland Assembly that this advisory mechanism comes into action. But at present, since the1973 Constitution Act is not in operation, these regulations when they apply to Northern Ireland do not receive any parliamentary scrutiny whatever, nor is there any way of bringing them forward on the Floor of the House.
I therefore make two propositions. The first is analogous to that which I have already made, which looked to me as though it might have achieved a glad eye—no, two—no, four glad eyes, on the Treasury Bench. That is, that, whether or not the regulations applying to Northern Ireland are at the time subject to parliamentary procedure, Parliament—which is the only representative body for Northern Ireland at present—should have the benefit of the advice which the committee tenders upon them, no less than upon any others. That is my first proposition.
My second proposition, which the House may have heard before but which is none the worse for that, is that we should give up the silly habit of legislating in Acts of the Imperial Parliament for a constitution which, since I last made these remarks, the Government have themselves declared is never going to be reactivated. For on 29 November the Secretary of State declared in this House in so many words that the constitution under which the Northern Ireland provisions of clause 9 are drawn will never work again. I must say, little excuse as there was before for drawing Acts of Parliament in this absurd fashion, there is none now. Until there is some different constitutional dispensation, it is the duty of this House to legislate properly for Northern Ireland as for any other part.
I therefore hope that this Bill will be the first case where this House will insist not merely upon the advisory committee doing its duty for Northern Ireland as for the rest, but upon legislating for Northern Ireland, in this parity area of social security, as it legislates for Great Britain.

Mr. Tom Benyon: We are discussing the Bill against a backcloth of the realisation of the need to hold back expenditure and of the decline in world trade and the creation of wealth.


It is extremely difficult to see the way forward to light at the end of the tunnel. Unless we expand wealth in this country, it is inevitable that we shall have a no-cost Bill.
At the moment there appear to be two divisions in our society. The first consists of those who are dependent on the State—we might say that they are in State bondage, and they are legion—and those who are independent of the State. Today we are discussing provisions for those dependent on the State and how we may transfer to them, most efficiently, the static resources of our society.
It is inevitable that this should be a no-cost Bill. As a society we are spending £9,000 a year more than we have. We need to know from those who wish the Government to spend more from where precisely the money should come. We may be compared with an ancient aristocratic family that has been living above its means for a long time and has already hocked the silver to pay the butler. We cannot conceivably go on doing that.
The Conservative Party believes that a precondition of social concern must be the creation of wealth. I also believe that. What we must do—I believe that the Bill has started to do it—is to help those in real need. In the Bill we are making a beginning in simplifying the administration of social benefits, which to many people, including myself, is completely incomprehensible. We are taking a few more steps along what I consider to be the road to the ultimate satisfactory goal, which is the introduction of a tax credit system.
I reject the comments made by the hon. Member for Swindon (Mr. Stoddart) that we are hard-nosed Tories. The facts belie that myth. I think that our record is a fine one.
I pay tribute to my predecessor, Airey Neave, who did so much work for the over-80s in providing pensions for them under the previous Conservative Administration and, for the first time, the annual increase for pensioners. We introduced the Christmas bonus and we increased pensions by 54 per cent. Pensions will be increased by 19½ per cent.; again, there will be a Christmas bonus; the earnings rule limit will be raised from £45 to £52 and in some cases abolished.

That will please many thousands of people. We promised to protect pensioners against price rises in future. Pensioners in our society can look forward to sharing the increased standard of living of the country if we manage, as pray God we shall, to increase that wealth.
The maxim "To each according to his need" could, possibly mistakenly, be applied to those who obtain help whether they need it or not. I consider that the current system of welfare benefits is extremely inefficient. It is absolute madness to give benefits to families who do not need them. If the State takes on too much of the responsibility that families have shouldered for generations, the fabric of the family may be undermined.
The responsibility of families who can look after themselves, and who wish to do so, may be regarded as the glue that holds the family unit together. I think that Beveridge would have been amazed at the present tapestry of benefits and the incredible complexity of the system, which many people find incomprehensible and frightening. It was very sad that the Conservatives lost the 1974 election—otherwise we should have introduced the tax credit system by now.
The hon. Member for Birkenhead (Mr. Field) has done great work on the child benefit system. There is a lack in the Bill, because we have not been able to do more at this time.
The Conservative Party has been guilty of talking too much about scroungers in our society. Such talk can give to the many thousands of people who really are in need of State benefits an overweening sense of guilt as they collect them. Those who need the benefits should not be ashamed of claiming them. They should regard them as a right. We should not talk so much about the scroungers in our midst.
Ministers with responsibility for this matter should be wary of the pressure groups—I call them the middle-class vocal pressure groups—who manage to pull the ear of the Minister and cause a tremendous amount of fuss. In our democracy, inevitably, we give to those whence the votes come. If too many people are lobbying as hard as they can for their own corner, we should not allow their voices too much sway. The army of


the deprived have no lobby. The one-parent families, the disabled, and those in need, find it extremely difficult to marshal the lobbyists.
I commend the Bill to the House. It is a good start, but it is only a beginning. I am sure that there will be many more in the life of this Parliament.

Mr. Andrew F. Bennett: The 10-minute rule discourages Members from referring to other speeches.
The hon. Member for Liverpool, Wavertree (Mr. Steen) referred to poverty. If he wants to see grinding poverty, he can see it in his own constituency—and certainly in Liverpool—without having to refer to the United States. The Bill is a fitting message from the Conservative Government in their last major item of public business before Christmas. In fact, it robs pensioners. The Government could have done little meaner than this in their first six months. The saddest aspect is that the Bill brings the pensions issue back into the ping-pong of party politics.
I am surprised that the measure is a clear statement that the Government expect their economic strategy to fail. If the Government believed that their economic strategy would succeed and that the present cuts would create future wealth, the measure would have been unnecessary, as they would know that the extra money would be there to pay the benefits.
Do the Government believe that by next November, when this measure has its effect, incomes will have risen by more than the level of inflation? If they do, does that mean that no extra real wealth will have been created? If that is the argument, it is a measure of the fact that the Government have failed. If they do not create real wealth, they will try to ensure that incomes do not rise. If incomes do not rise faster than inflation, again the measure is unnecessary.
If the Government have faith in their own strategy, they should believe that they will create extra wealth. Therefore, pensioners should be in a position to share in that extra wealth. When the Minister for Social Security winds up the debate perhaps he will explain why, as a Labour Cabinet Minister, he believed that pensioners should be guaranteed the best of both worlds. He believed that extra wealth would be created, yet now he seems to believe that the pensioner cannot expect to have the best of both worlds. I understand how people can cross the Floor of the House. However,

on this kind of principle it is difficult to change one's views in such a short period.
Perhaps the right hon. Gentleman could also say how his right hon. Friend made a promise that the pensioner would benefit in some way from the measure and future wealth. Although I doubt whether the Government will create much more wealth by their economic package, at least North Sea oil should give them the opportunity to give benefit to pensioners. Perhaps the Minister will explain how he envisages pensioners' real income improving in the future.
The argument in the Bill is based on the ratchet effect. In practice, if the ratchet effect worked out at its most favourable from the pensioners' point of view over the next five years, the actual improvement in pensions would mean that the majority of pensioners would still have to claim supplementary benefit. They would still have a pension that would need to be topped up by supplementary benefit. So that argument is a non-starter.
What I find most offensive is the Government's attack on scroungers. It amazes me the amount of effort that people put in, week after week, searching for a job. What Government Members should do is pay tribute to those who make the effort to find work, rather than attack them time and again. If the Government put the same amount of effort into stopping tax avoidance and persuading people to pay a fair amount of VAT, particularly the self-employed, they would gain more money than by chasing the scroungers.
I turn now to some of the aspects of the present supplementary benefit system that need reform. I start by referring to the way in which allowances are worked out on a weekly basis. Many elderly people, pensioners and others on supplementary benefit, would like to take advantage of the Government's provisions for a home insulation grant. It would be to their benefit to obtain a better standard of heating in their homes, and it would make better use of their resources.
These elderly people cannot do that because they are unable to provide the small amount of capital required for their share towards the local authority grant to have


the work done. If the Supplementary Benefits Commission could make them a loan, they could pay it back out of their benefit over a few months and that would enable them to have the work done, which would benefit them and the community because of the amount of energy that would be saved. That is a simple example of how a weekly payment assumes that people need money merely to get them through that week, with no thought for the future.
In Stockport we have a rather mean local authority. One of its policies is that the tenant should be responsible for much of his own repairs and maintenance. For instance, if a garden gate falls off, the council will not replace it. Those on supplementary benefit, with no resources on which to draw, are unable to get any help from the Supplementary Benefits Commission to have the repairs done.
In Manchester, just down the road, the corporation has a slightly different attitude. Included in "repairs allowed" are such things as garden gates.
A slightly higher rent may be charged by that corporation, but that extra rent is automatically paid by the Supplementary Benefits Commission. So we have one local authority where tenants can have repairs done and paid for by the Supplementary Benefits Commission, while people in the adjoining local authority do not receive that assistance. That is a simple example of the way in which benefits are so unfair as between one area and another.
There is need for a change in the housing subsidy system, with part of it coming from supplementary benefit and part through the rebate system. Time and again people are given advice about which way they would benefit most—whether to go for a rent rebate, a rate rebate, or to apply for supplementary benefit. Often it is found that, because of marginal changes in the system, people are given the wrong advice. They find the system extremely confusing.
I, as a Member of Parliament, find it difficult to advise people which way to go. Often people lose one benefit because of the passport effect. Sometimes they are better off claiming supplementary benefit because it gives them the passport to various other benefits; or they might find that they could get more benefit by

claiming for a rent or rate rebate. It is high time that we had a uniform housing benefit.
The only reason why I have reservations about pressing for that at present is that I want it to be done through extra money being put into the system and I fear that the Government might take the opportunity to go for a unified housing subsidy in order to cut back the amount of money available.
Reference has been made by many hon. Members to the need to uprate child benefit. There is an overwhelming case for making sure that child benefit is increased next April. If the Government want to remove the disincentive to go back to work, the simplest way to do it is to increase child benefit, because child benefit is there whether the person is in or out of work. It is an important area of family support. There is a need for an announcement of a major uprating in that system.
I regret that the previous Government did not increase child benefit to a level where it could justifiably have been index-linked. It still needs to be raised considerably, as my hon. Friend the Member for Swindon (Mr. Stoddart) said, so that, in real terms, it is above the old benefits that were available under family allowance and tax relief. Once it is above that level it should be index-linked, just as pensions should be index-linked, so that it continues to rise without becoming a ping-pong ball across the Chamber.
The Bill ought to have little support from the House. It is particularly harsh on pensioners and takes them into the political arena again. What we need is a major reform of social security which brings further benefit to those on very low incomes, and not a no-cost Bill such as this.

Mr. Iain Sproat: I welcome the Bill and the new radical and reforming attitude that the Government are showing towards the whole question of social security benefits. I welcome the reforms that have been specifically inserted into the Bill and the future reforms to which my hon. Friend referred when he opened the debate.
I want to make one general proposition and four specific points. The general proposition, as a kind of background to


the Bill, is that I believe that the social security system is now running out of control. It is running out of control, first, because it is costing the country more than it can afford, and, secondly, because too often too much goes to the wrong people and too little to the right people. I emphasise the second part of that proposition—too often too little goes to the right people. People always pick on the fact that some people get too much out of the social security system, but the other part of the proposition is just as important and is complementary to the first part.
I turn now to my four specific points. First, I believe that all short-term benefits should be taxed, just as wages are taxed. Secondly, benefits to strikers' families should be curbed. Thirdly, short-term benefits should not be index-linked. And, fourthly, a firmer legislative line should be drawn between those who are unemployed and genuinely want to work and those who are unemployed and do not want to work.
The reason why I say that short-term benefits should be taxed is that I believe that one of the most important things that we must do in this country today is to make it worth while to work hard again. At the moment there is far too little difference between taxed wages and untaxed social security benefits. There must be a greater difference between those who are working and those who are not, in terms of reward. The fact is that too many people in this country are either better off not working, or almost as well off. If a man can get £50 a week by not working instead of £65 a week after tax in a job—

Mr. Rooker: Who gets that much?

Mr. Sproat: The average couple get £63 a week for the first six months. We had a parliamentary answer on this matter to the hon. Member for Norfolk, North (Mr. Howell). [Interruption.] If the hon. Member had been in the Chamber earlier he might have heard that this is a Ten-minute Rule speech.
There are people who are almost as well off when they are not working as when they are, and if they are not working they are in a position to take moonlighting jobs where they can get payments, and get them tax-free [Interrup-

tion.] If Labour Members do not realise that they certainly do not realise what is going on in the black economy in this country today. Too many people find it too profitable to live off a combination of tax-free social security benefits and tax-free moonlighting payments. That is a fact whether or not Labour Members like it.
My second point relates to strikers families' benefits. They must be curbed, because to many people in this country there is something deeply offensive about a situation in which they are first hurt by the strike and then asked to pay to subsidise it through their taxes.
The paper that we have seen leaked in the press over this last week makes some sensible proposals about how these payments could be curbed. As The Guardian rightly said this morning, it would certainly save money. It would also act as a deterrent to strikes—not an enormous deterrent, but certainly a deterrent. Since I believe that restrictive practices and over-manning, backed by the threat to strike, are one of the biggest single factors holding this country back today, I would welcome that.

Mr. Rooker: The hon. Member would pay the families of murderers, but not the families of strikers.

Mr. Sproat: The third point that I wish to make is that short-term benefits should not be index-linked. I put old-age pensions apart. When times are rough it is right that every section of society should bear its fair share of the rough times. After all, if wages are not to be protected against inflation, why should benefits automatically be proteced? People in work must be protected because that, above all, is what is needed today. Nobody has an automatic right to be protected against the ravages of inflation. Of course it is the Government's economic priority to squeeze inflation out of the system, but until that happens everyone should bear a fair share of the rough times. That is social justice.
My fourth specific point is that we need a far firmer line drawn between those who are unemployed and who genuinely want to work and those who are unemployed and have no intention of taking a job as long as they can get


away with it. This syndrome means that so many of the unemployment figures are totally phoney and seriously misleading. If one thinks of the vast ramifications of Government policy and Government spending that are based on totally false unemployment figures, one realises that it is important for the Government to recognise the difference between those who are genuinely unemployed and those who are not.
Hon. Members often ask "Where are all these jobs?" I shall tell them. This afternoon I called up the chairman of a dairy factory in my constituency. For the last few months he has tried every week to get a man to drive one of his milk floats in the north-east of Scotland. Every week he has put advertisements in the local paper, and every week he has gone to the jobcentre in Peterhead. [Interruption.] How much does he pay? He pays £88 a week, and that is not a bad wage by anybody's standards. In Peterhead there are 600 people registered as unemployed, yet for six months this man has not had one application for a job worth £88 a week.
That demonstrates quite clearly that if such a job is going begging in a place where 600 people are registered as un employed and there is not one applicant, only someone who is totally blind to reality will refuse to admit that out of that 600 there must be many people who have no intention of getting a job be cause the combination of social security benefits and tax-free moonlighting means that they are better off. [Interruption.] I should be interested to hear whether any Labour Member who is now interrupting from a sedentary position could explain why it is that in a place where 600 people are registered as unemployed there is not one applicant for a perfectly respectable job.
Those are the four main points that I wish to make. I welcome the fact that the Government recognise that our social security system has run out of control and that the time has come for radical reform. I welcome the Bill as a first step towards that reform.

Mr. D. E Thomas: I assume that when the hon. Member for Aberdeen, South (Mr. Sproat) referred to

moonlighting milkmen, he was referring to hours of work.
At every level of poverty income up to 140 per cent. of supplementary benefit level, the proportion of families in poverty in Wales exceeds the proportion in England, Scotland and Britain as a whole, and in all English regions with two exceptions. Given the appallingly low level of our social security benefits, this adds to the burden of poverty and exacerbates the situation. The greater dependency on social security benefits in Wales is an important reason for the low average incomes there. There are relatively more old people, more sick and disabled, more unemployed and more people dependent on supplementary benefits.
If one looks at the statistics published in 1978 in the family expenditure survey of the sources of household income and the percentage of gross household income derived from social security benefits, one sees that the proportion of the latter in Wales far exceeds that in the rest of Britain. It is 14·5 per cent., compared with only 9·1 per cent. in South-East England. Because of this, the severe dependence on supplementary benefit for in come maintenance within the United Kingdom income maintenance system is so important to Wales. Personally, I deeply deplore this.
We are now in a situation where the 3 per cent. of the population who were initially dependent on the national assistance scheme in 1948 has grown to more than 9 per cent. We must look particularly at those categories within the system itself who are deprived. Because of the nature of the contributory system of national insurance, fewer than two-fifths of the unemployed are actually in receipt of unemployment benefit. Therefore, nearly half of them are claiming supplementary benefit. In that context we must look at this Bill and the review out of which the Bill emerged.
The DHSS review "Social Assistance" recognised that
the social assistance scheme in this country is having to play a role for which it was neither originally designed nor subsequently adapted.
The review concluded:
either the numbers of claimants must be reduced to a much lower level at which discretion could be properly administered on an individual basis; or the scheme must be adapted to its mass role".


The Government have adopted the second course. In a quite ingenuous reference to the "Social Assistance" paper, paragraph 4 of the White Paper says:
We therefore propose to adapt the structure of the scheme to meet its present role, as 'Social Assistance' suggested.
It fact that was one of the two options that had been suggested by "Social Assistance" and it is significant that, given this Government's overall policy, it is to the so-called low-cost option that they have turned.
What is deeply distressing about the White Paper, and the whole debate, is that there is, apparently, in our attitude towards social security not even the vestige of a commitment to some sort of long-term change. We are to rely on the supplementary benefits system as it now exists, with a few administrative changes here and there. There is no idea of a programme that would increase the general level of social security and national insurance benefits and take people away from dependence on the means-tested benefit. The vestige of paying lip-service to that has disappeared from our debates.
I oppose the Bill because it is an attempt to avoid the major issue, and an attempt not to end the discrimination—the most serious aspect of our supplementary benefits system—against the long term unemployed.
In the time that is available to me I wish to refer specifically to the failure of the Government to extend the long-term rates of supplementary benefit to the unemployed. It was referred to in the last annual report of the SBC, which states:
We regard this discrimination against the unemployed and their families as wrong, and its removal is our highest priority for the improvement of the supplementary benefits scheme. Some 120,000 claimants, about one-third of whom have children, are being denied £7·95 a week (£5·40 if single). They include many people who are unskilled, and all of them have been without work for at least two years with all that this means in poverty and damage to their confidence. They include many people who are physically weak or suffer from minor disabilities. They include, above all, people on whom society's demands place a heavy strain at any time. Such people have no chance of securing work while unemployment remains at its present level, and it is unjust to deny them the increase in benefit all others get.
The SBC report goes on to cost the change that I am advocating of placing

the unemployed on the long-term rate on the same basis as all other claimants who are being given access to the long-term rate after one year. The additional cost would be £40 million a year, and 180 extra staff would be needed. That would remove the discrimination that the SBC contrasts with the £2·7 billion cost of uprating all social security benefits in 1979, or the hundreds of millions spent on any child benefit uprating.
We are facing a position in Wales, especially on Deeside and the south east, where we shall see a massive increase in unemployment. We must protect the living standards of the families of those who are deliberately being made unemployed by the Government's policies. We hear talk of incentives, the work ethic, and the personalist and individualist analyses of unemployment from Conservative hon. Members. They miss the basic fact that the structural policies of the Government and the failure of the economic management by succesive Governments are creating unemployment that is not a personal phenomenon but a social phenomenon. We should not try to tackle it in terms of the personalist attitude of individuals refusing work. In the steel communities of Shotton, Port Talbot and Newport we shall face the devastation being deliberately created by the Secretary of State for Industry. What sort of work incentive will there be for the unemployed? I plead with the Government, when the Bill is considered in Committee, to reconsider their decision not to allow the unemployed access to the long-term rates.
A recent study indicated that the supplementary benefit—as a pro portion of the estimated cost of child support in real terms, adjusted for inflation—gives for a child aged 2 a supplementary benefit rate that reflects only some 66 per cent. of the minimum cost. At the age of 8, it falls to 58 per cent. of the minimum cost. Quite clearly, on an objective calculation of the minimum costs of bringing up young children, the children's rates—even as they are simplified and allegedly improved in the Bill—are still basically inadequate.
I strongly object to clause 1 because of its effect on pensioners. The whole attitude in the Bill means that it will not


provide any real benefit to claimants. It will not increase their living standards. There are certain administrative changes, such as automatic notices and publicity for rules, which we welcome. The Bill represents the Government's failure—and that of successive Governments—to come to terms with the real role of a supplementary benefits scheme, and to attempt to reflect that scheme as a part of social policy. Its real cost is the cost of the Government's economic policies. On the one hand, the Government deliberately create unemployment, and on the other they deliberately refuse to maintain the incomes of those who are made unemployed.

Mr. John Butcher: I take issue with the last statement of the hon. Member for Merioneth (Mr. Thomas). No one deliberately creates unemployment, and no Government do. Any Government would hope so to restructure the economy that we obtained a healthier revenue-raising and wealth-creating function. Then we can talk of the social wage on which that is built.

Mr. Foulkes: Mr. Foulkes rose—

Mr. Butcher: I shall not give way on this occasion, for obvious reasons. I take issue with the hon. Member for Swindon (Mr. Stoddart) and the hon. Member for Birmingham, Perry Barr (Mr. Rooker). They both trotted out the old slogan about the better treatment given to the families of convicted prisoners compared with the potential treatment that the Government might give to the families of strikers. I sometimes think that that slogan, often as we have heard it during election campaigns, was probably the result of three days in a smoke-filled room in Transport House. I can see the lads in Transport House posing themselves the question, "How best do we draw a red herring across the electorate's trail to dissuade it of the sense of the Tory Party's potential proposals on strike pay?
A convicted criminal has paid for his crime by being put in gaol and deprived of his freedom. Opposition Members would surely not argue that the family should be allowed to starve? I suspect that Opposition Members would be the

last to argue that. By comparison, if a wage earner consciously withdraws his labour and deprives his employer and the nation of part of the wealth-creation process, it is surely morally right for us to ask whether the State should subsidise him in that objective. I hope that in future social security Bills the Government will not lose track of their hinted pledge—never overtly stated in such terms—that deemed strike pay will be considered as an option as far as performance is concerned.
I wish to consider three measures incorporated in the Bill that come under the heading of the simplification of the methods of assessment of benefit. First, I draw a comparison of the present situation with the future situation on the treatment of capital resources when a client goes into the DHSS office and starts a discussion on the extent to which he can support himself. Under the present system, officials must use a table in order to arrive at a notional figure of assumed income from capital. That bears no relation to the actual interest rates that the applicant receives on his capital. A very complicated table is used, which incorporates a rigid sliding scale. The result is that, understandably, the officials some times arrive at the wrong answer. At all times extra checking is required by a supervising officer.
The Bill provides a cut-off point of £2,000 of capital, which is extremely helpful. Those with less than £2,000 will be assumed to have no notional income when benefit is calculated. Those with more than £2,000 will not receive benefit.
The second aspect where simplification is to be welcomed is in the reduction of the number of children's scale rates from five to three. At present officials must continually be on the look-out as children grow older. The rates have to be changed frequently and the mother's supplementary benefit book must be correspondingly amended. When the Bill is enacted the changes will be less frequent. Staff will be relieved of many of the time-consuming chores that the changes entail.
The third aspect that I welcome concerns rent contributions from non-dependent members of a household. At present, officials must make a complicated arithmetical calculation that is based on a proportional sum depending


on the amount of rent paid and the number of persons in the household. The calculation changes every time the rent is changed.
I take the example of a man and wife with four children, one of whom is working and therefore non-dependent. The formula dictates that the non-dependent wage earner must pay two-ninths of the rent. The supervising officer has to under take a fairly sizeable calculation. The Bill proposes that the non-dependant of the household contributes a fixed sum. Nothing could be simpler.
I am sure that the staff in DHSS offices throughout the country will welcome the three moves to which I have referred. When we boil it all down, the provision and the quality of the service to the clients of the DHSS are a function of two factors. The first factor is the level of aid available, namely, the revenue that we commit to the services. The second factor is the ease and simplicity with which officials can interpret the rules and explain them to the clients. I believe that the right hon. Member for Salford, West (Mr.Orme) would have welcomed the opportunity to introduce the three provisions that I have highlighted. At all times we should bear in mind the role of the staff, the front line troops in DHSS offices. The Bill goes quite a way towards assisting them in their endeavours.
Finally, I direct a question on staffing to my right hon. Friend the Minister for Social Security. Simplicity is of the essence. How does my right hon. Friend see the holding or the reduction of the level of staffing, bearing in mind that there were 58,244 staff in 1966 and 74,549 in 1971, whereas there are 87,603 now. As a rider to that question, I urge the Government to consider the introduction of computerised methods. It is an open secret that the tax credit system, which had all-party support and which was to be welcomed on social and economic grounds, was thwarted by the lack of computer resources and the level of expertise within the Department.
I have a dream—I apologise if I sound like the late Martin Luther King—of applicants entering a DHSS office and facing the little red box that issues tickets. They clutch the tickets and hold them until it is their turn. They have to wait, whether they are short-term, long-term

or immediate claimants, or professional wheeler-dealers who try to get as much as possible out of the system. They are all mixed. Imagine the day when those who are in genuine need and genuine receipt can go into the office with a little plastic card—a glorified cash system—to receive their benefit. The system would provide for rate changes. It would be programmed to allow it to cope with changes. That is a dream, but, as the Americans say, the technology is already here. All that we need is the will and the money.
I hope that my right hon. Friend the Minister for Social Security will take up my question. I shall welcome some guidance on the staffing implications of the Bill's simplicity provisions.

Mr. Frank Field: I take the House back to the contribution of the hon. Member for Aberdeen, South (Mr. Sproat. Many of my right hon. and hon. Friends feared that the hon. Gentleman was giving us the true face of the Tory Party. He is campaigning for the breaking of the index-linking of short-term benefits. If he is successful, those on short-term benefits will experience real cuts in their living standards. We did not do that to the unemployed in the 1930s. At that time cuts in unemployment benefit were smaller than price cuts. If the hon. Gentleman is successful, the Bill will mark the end of post-war consensus politics in these matters. If that happens, the gloves will be off. As the hon. Gentle man is not in the Chamber, I shall not develop those arguments. I shall talk about other matters.
Instead of discussing the Bill clause by clause, we could be asking "What are the major crises that face the social security system and how well does the Bill meet the challege?" There are two major crises facing those who are dependent on benefit. Those who receive supplementary benefit or depend on social benefits are part of an ever-growing army that depends for its livelihood on means-tested assistance. The first question that must be asked is "How many will be lifted free of means-tested assistance?" The answer is "Nil".
A second crisis facing those at the bottom of the income pile in our society is "What are we doing to raise the relative living standards of the poorest?"


The answer to be gained from the Bill is "Nothing".
The Bill does nothing to meet the two great challenges that face the Welfare State. When we propose reforms that we should like to see take place, the question endlessly asked is "Where is the money to come from?" I am amazed at the cheek of Conservative Members who pose that question. The Bill, which deals with the poorest, has to be linked to the Budget. In that Budget the richest 7 per cent. were given tax handouts amounting to £1·5 billion. Conservative Members have the cheek to ask where the money will come from to guarantee that pensioners enjoy a real increase in their standard of living. The fact is that they have made other priorities. However, they pretend that there is something important about presenting reforms at nil cost.
One of the excellent briefing papers that we were given by One-Parent Families told us that the Bill was a reform that involved robbing Peter to pay Paul. That was the only mistake that I could and in that paper. It is a reform that involves robbing Paul to pay Paul. The last Liberal Government—I see no Liberal Members on the Liberal Bench although there is one present in the Chamber, the hon. Member for Truro(Mr. Penhaligon)—introduced the National Insurance Act 1911. A Member called Jack Jones, who represented Silvertown, opposed the Bill. In going through the Lobby against the Bill, Jack Jones sang "It is the poor that pays for the poor". He argued that the poor have to pay for any reforms that are served up. That is the tune we could be singing tonight.
We can see the significance of this measure on the poor in our constituencies if, for example, we see what difference it is going to make to the poor in Wallasey. Wallasey is not only represented by the hon. Lady on the Government Front Bench but is a neighbouring constituency to mine. In the Bill, under the guise of nil cost, the Government are serving up a diet that will make 3,000 poor people in Wallasey worse off. That goes under the euphemism of nil cost. Among the major objections to the Bill is the fact that it is shovelling money around among the poor. There is no redistribution from rich to poor.
Despite that objection, some good things can be said about the Bill. The notice of assessment is to be automatically issued. That is a good reform. The tapering of disregards is also a good reform, as is the news about simplification of children's benefits.
There is now a wealth of evidence that the most hard-pressed in our community are those with children. Whether one looks at the reports of the Supplementary Benefits Commission, the nutritional work of people like Church and Walker or the latest pamphlet by David Piachaud, one finds that those with children are the most hard-pressed and those to whom we wish most resources to go.
Before giving an unqualified welcome to the changes in the children's rate, I hope that the hon. Lady will take note of a point and pass it on to the Minister who is to wind up the debate. Am I right in assuming that, although the rates of the youngest children from 0 to 5 are being increased to the next age band, the 0 to 5s will still carry in addition the 95p heating addition? I wish to know whether the youngest children will be getting larger benefits than those in the next age group.
I welcome the proposals in the Bill for simplification of the exceptional needs payments. It seems simple when one reads the White Paper. But how will the Government lay down what is supposed to be covered by the scale rates and what might be covered by exceptional needs payments when we have no idea of the costs of living for those at the bottom of the pile? Before that question can be answered sensibly, major budgetary studies need to be undertaken into the costs of guaranteeing people living standards at a certain level of income. I hope that this will come from another reform that I almost welcome. That is the replacement of the Supplementary Benefits Commission by a new body.
On this I wish to put a number of questions to which I hope the Minister will be able to reply. We do not wish to see a weakening of the role developed by the Commission. It is crucial that the new body not only has a chairman with time to devote to the task, but that it has a duty to report annually to Parliament on what is happening to living standards not only of those receiving benefit


but of the poorest in work. We shall never make sense of the worries expressed on both sides of the House about incentives to work if there is no body to oversee living standards of all poor people.
I should like to end by making one comment about breaking the link between pensions and earnings. Many hon. Members have concentrated on this point. I should like to add a piece of information that may shed light on why the Government are bringing forward this measure. The hon. Member for Abingdon (Mr. Benyon) referred to my previous life, if I may so express it. One of our actions at the Child Poverty Action Group was to take the previous Administration to court over what the Government are calling the fudging of the uprating. The result of that case, as the Secretary of State said, is that we lost. But the reason for clause 1 of the Bill is that, although we lost the case, it prevented the Government from manoeuvring again. There is no more room, in other words, to fudge on the pension uprating. The Government have now to seek powers in clause 1 to allow them to cut the living standards of pensioners.
It was right that my right hon. Friend the Member for Salford, West (Mr. Orme) should remind the House and the country that, had the present Government's formula been in existence over the past five years, pensions would have been £5 lower today than they are. There are some good measures in the Bill. Some of the simplifications are to be welcomed. But the two most vulnerable groups are left out. The pledge given to pensioners is about to be torn up and the children of those who work do not even rate a mention in the Bill.

Mr. Peter Bottomley: I am glad to follow the hon. Member for Birkenhead (Mr. Field), but I shall not deal with the points that he covered.
I should apologise to the right hon. Member for Salford, West (Mr. Orme), because I slightly misled him by not adding a figure at the end of the question that I put to him and that he failed to answer, not because he did not understand it, but because he did not have an answer. Per haps I may briefly take him through the figures. [Interruption.] I should be grate-

ful if he would not interrupt before I give the figures.
Taking the pension as £25 a week and average earnings as £75, if average earnings increase by 20 per cent. in one year, at the end of that year the pension, being uprated by 20 per cent. in line with earnings, would go to £30 and earnings to £90. If in the following year the consequences, of those earnings meant no increase in production, but a 20 per cent. increase in inflation, the pension in the following year would go up by another 20 per cent. to £36 while earnings would remain at £90.

Mr. Rooker: That is not true.

Mr. Bottomley: I am using a hypothetical example.

Mr. Orme: The hon. Gentleman cannot do that.

Mr. Bottomley: Perhaps the right hon. Gentleman would cease from saying that I cannot do it and allow me to do it. That seems reasonable. The only conclusion that I can draw from his muttered comments is that he does not like the figures. I shall continue with the figures and show that that movement from in creases in earnings unearned to increases in prices, which may follow, will lead to a difference in the percentage that the pension represents from 33 per cent. to 40 per cent.—a 7 per cent. increase, or a straight increase of 20 per cent. on the pension. Unless we have the change put forward by the Government, that can happen in the circumstances that I have postulated. I think that the right hon. Member for Salford, West should accept that and accept that he did not answer the question. To say that it can never happen is not to deal adequately with it.

Mr. Nick Budgen (Wolverhampton, South-West): Does my hon. Friend agree that the theory that a 20 per cent. general increase in wages inevitably leads to a 20 per cent increase in inflation, or, as the Opposition would put it, in the RPI—and they are different things—is not the theory on which the Government are proceeding?

Mr. Bottomley: I shall continue with the second point that I wish to make. The point of my first discussion of the pension was to deal with the ratchet. From what one can see, the Opposition do not seem to appreciate the effect of the ratchet.


Nor do they seem to appreciate that no Government during the lifetime of a Parliament have kept the pension only at the level necessary to keep it in line with rises in prices. I think that we can trust Governments—if not, they are likely to be thrown out of office at the next election—over the long term, which is for more than a year, which is all we are trying to get ride of for the ratchet, to keep the pensioner's income in line with the general rise in the standard of living.
I should be tempted to vote against this provision if I thought that the Government were not determined to do that. The argument against the automatic ratchet demands that attention be paid to it.

Mr. Foulkes: Will the hon. Gentleman give way?

Mr. Bottomley: I have already given way once. I do not have much time to give way. I do not want to take my full 10 minutes.
I deeply regret that the Government have not taken on board the importance of increasing child benefit. If I were speaking from the Treasury Bench, I should give a Government commitment that over a period of years—I accept that it would have to be a period of years—the child benefit level must be increased at least to the short-term national insurance benefit for children and ought to be level with the higher rate. There is no logic in having a target that is anything less. When we talk about incentives to work, as has been said by many other speakers, we must accept that child benefit must be increased. If we want to deal equitably with the burden of dependency, child benefit is the method to deal with it.
It is a disgrace to the House and the country that neither of the main political parties since the war has done anything effective to bring the level of income support for children into line with the increase in levels of income for people who have retired. Because children spend their time as dependants with their families whereas some pensioners do not seems an inadequate excuse for leaving the effective level of child benefit where it was when family allowance was introduced shortly after the war.
It is a disgrace that the Conservative Party has not done more about it. It is

equally disgraceful, though not more so, that the Labour Party did not do much more during its periods of office since the war. One looks back to high alumina cement and what the previous Chancellor of the Exchequer said about the reactions of trade unionists and the rest and one recalls Governments not carrying out their minor commitments.
I intend to wait and see what the Government announce during the next three or four months on child benefits. I do not intend to wait vaguely and vainly for no comment from them. If I am a member of the Committee, I shall do what I did in Opposition and vote for increases in child benefit. If by the time this Bill comes back from Committee there has been no Government announcement on child benefit, I shall consider that a suitable reason for regarding this Bill as inadequate. I do not give a total commitment because I am not a rebel all the time, but if the Government decided not to link child benefit to either the short-term national insurance benefit rate or to earnings or prices, the Bill will be totally inadequate.
Having said that, I shall do my best to gather support from the Opposition as well as from the Government Benches for a coherent case to be presented to the country. It is clear that there is more interest in arguments about the third London airport or what should happen to the steel industry than in these issues. When we discuss regular dependable in come support for 7 million families—that means 14 million children—attendances in the House are poor and we do not get the support of lobbies outside. We have an ineffective political system which needs to be changed.
I shall not go through the provisions of the supplementary benefits scheme while speaking of raising money. If there is to be a no-cost change following a no-cost review, we may have to live with that for a short time. But if one looks forward to having increased transfer payments—and I look for that—and if over the years one raises the level of supplementary benefit to a scale which people who are in work say would be right if they were out of work, one must have increased revenue.
Clearly, the Government's industrial and economic policy will, over a period, reduce social expenditure in industry. I


say that we are right to give transitional help to industries in trouble, but we should be paying social benefit to people in domestic need rather than giving money to decaying industries.
We should re-examine what used to be called by the previous Government the social wage and see whether we can alter housing subsidies and expand the tax base through adjustment to the mortgage interest relief system, which is not always as effective as it should be. We should do the same with council tenants and make sure that rents paid by council tenants are about 15 per cent. to 16 per cent. of their average incomes rather than half that amount.
I should like to see a Government commitment on revenues from tobacco and alcohol—especially from tobacco. They should raise the tax on tobacco at twice the rate of inflation. I speak as a reluctant smoker. There is no argument for accepting that the essential costs that families have to meet should rise faster than the cost of things which are inessential and, in general, harmful.
I have given the Government the answers and have made the speech that I would have made had I been on the Treasury Bench. I have shown the Government how to raise the money and I have invited the Labour Party to join in a crusade waged in the country as well as in this Chamber.

Mr. A. W. Stallard: Had I been fortunate enough to catch your eye before 7 pm Mr. Deputy Speaker, I would have developed many of the points that have been raised though all too briefly. I would have strongly supported the case made in an eloquent speech by the hon. Member for Brighton, Kemptown (Mr. Bowden), with whom I share the chairmanship of the all-party pensioners' group. His speech illustrated the concern felt in the all-party group about the severance of the link between pensions and wages. He dealt with that very well. I fully support everything that he said and I applaud his courage in saying how he would vote in the Lobby tonight.
Hon. Members have referred to resettlement centres. Those of us who monitor

the performance of these centres can be forgiven if we are cynical about the simple change in name. We want more than a change in name from reception to resettlement. Is the proposal a genuine attempt to move towards a replacement for reception centres for the single homeless by the provision of housing, social support and health care in the community? Nothing short of that will satisfy us.
In many cases the resettlement or reception centres are no better than the casual wards that existed under the old poor law system. They have been disguised under different names. I should have liked to enlarge upon that topic, but the 10-minute limit on speeches at this time of night prevents my doing that.
I turn to the question of the Supplementary Benefits Commission and the ending of discretionary payments under the social security scheme. We may have been stymied by the chairman of the Commission appearing to welcome its abolition. I am sure that I shall be for given if I do not go all the way with that welcome.
What advantage will such a move have for the poor people who can lift themselves out of poverty and provide the vestiges of a living only through that Commission's benefits? If that move benefited such people, I should accept it, but I am not sure that it will. I am convinced that that is not the intention.
I accept that the present social security scheme, with its wide range of entitlements, is difficult and complicated and that claimants do not always understand it. Because of that complexity, too many needy people are unaware of the benefits to which they are entitled. I could quote at length the statistics on the lack of take-up of the benefits. It is too easy for those who are not equipped to fill in forms or grapple with bureaucratic requirements not to apply for the help to which they are entitled. The complexity of the system provides an awesome task for the officers who administer the scheme. I pay tribute to those officers. They are a tremendous help.
It is in the interests of the claimants and the administrators for the social security scheme to be simplified so that


everybody can understand it and for the rules to be published and made available. There is a compelling argument for that. However, that does not mean that we should end the discretion involved in calculating the needs of individual families. We need not abolish the Supplementary Benefits Commission and the discretionary payments in order to simplify the rules.
We are always faced with that kind of choice—that in order to publish the rules and the regulations and make the scheme simpler, we must accept the abolition of the discretionary principle of the Supplementary Benefits Commission. I do not accept that. Perhaps in Committee I shall become convinced, but at the moment I am not. Any welfare benefits scheme must, as a matter of principle, improve discretionary payments to meet individual needs and circumstances.
I oppose the removal of that principle in the Bill, for five reasons. The first is that one must consider the history of the development of all welfare schemes in Britain. It shows that whenever Governments have tried to regulate or control part of the scheme by removing discretionary elements, special arrangements have had to be made by the National Assistance Board or Supplementary Benefits Commission to expand discretionary help to meet special needs. The system has always begun with regulations, but supplementary rules and regulations have to be brought in to put back what others took away. That has always been the lesson of the past.
If this scheme is to cater for the needs of all people, it must contain maximum flexibility. The attempt to remove some of that flexibility and put the scheme into a corset or straitjacket will prove unworkable and will soon have to be changed to meet exceptional needs.
Secondly, the Bill's determination to remove discretionary assistance is no more than a crude attempt to cut down the total number of claims by needy people on the social security system. That is the thinking behind it. In the name of fine principles, such as simplification, open government, polishing the rules, and so on, the Bill is introduced, yet its real aim is to cut down the number of needy who claim.
The Bill will give claimants the right to less total income. In a recent parlia-

mentary reply the Under-Secretary of State gave some enlightening figures. She said that as a result of changes in the Bill, 750,000 claimants would be better off, 500,000 would neither gain nor lose, but 1,750,000 would be worse off.
One could go into detail about those who will be worse off. They represent the most vulnerable and poorest people of our society. I am satisfied that it is not the high-sounding principle of simplification or open government that is behind the Bill, but a sinister element—that of trying to cut down on the number of claims.
The White Paper said that the total number of people dependent on supplementary benefit had risen to 5 million in 1978. It went on to say:
the obvious way to reduce the load on the supplementary benefits schemes would be to remove large numbers of people from it by increasing other social security benefits. But the levels of expenditure needed for this would be very large indeed".
The Government are therefore not going to do that. The White Paper continued:
We therefore propose to adapt the present scheme to meet its present role.
The Bill makes general cutbacks in many areas—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The 10 minutes allotted to the hon. Gentleman have now expired.

Mr. Michael Colvin: In the few minutes remaining I shall base my brief remarks on the one line in the Bill that provides for the Supplementary Benefits Commission to be abolished. One imagines that, with a puff of red, white and blue smoke, it will be gone. I hope that the commission's departure is not quite as abrupt as the language of the Bill suggests.
Throughout my 15 years as a councillor in local government I have been closely involved with welfare work. For 13 of those years the Supplementary Benefits Commission was in existence. Despite the occasional sticks and stones, the bones of that Commission are still unbroken. It has done an excellent job, but it was not until Professor David Donnison became chairman that the Commission's annual reports became alive


and looked constructively to the future. Under Professor Donnison's chairmanship it adopted the independent and creative attitude that had always been intended. The advisory role of that Commission is vital if the Government are to succeed in solving the greatest problem of the Welfare State—getting the priorities right.
The Commission has repeatedly drawn attention to three issues in particular. The first is the need for a simpler system and less and less discretion. I believe that the Bill is the first step towards simplification, but I should like to see us go very much further. I endorse what my hon. Friends have said about tax credits. They must still remain our long-term aim. We are told that they cannot be introduced now because of the problems of computerisation, but I honestly believe that at a time like the present, when we are looking at ways of cutting back Government expenditure, there are some items of capital expenditure that are worth while investing in. To computerise at this stage would mean that we should be in a position to capitalise upon the recovery when it comes. We must plan well ahead. I am sure that is the answer and I am sure that tax credits will remain our long-term aim.
The second issue that the Commission highlights is the inadequate level of supplementary benefit rates, particularly for families with children. Benefits are too low because inflation is too high. There has been much discussion this evening about the problems of indexation, but if the Government are really sincere in their fight against inflation, any expenditure over which the Government have control must be aimed at a level that is lower than the actual rate of inflation; otherwise they do nothing more than compound the problem.
The third issue raised by the Commission is the exclusion of the unemployed from entitlement to the long-term rate of supplementary benefit. I appreciate that this is another highly contentious issue and that the Government are unable to accept the Commission's recommendation. I fully agree with the principle of retaining a differential between income from work and income from unemployment receipts; otherwise people will ask "Why work?".
I suggest that the long-term rate of supplementary benefit could be paid to the unemployed, and the "Why work?" anomalies removed, if all welfare benefits were made taxable—not necessarily taxed—because the anomaly of the tax rebate when someone goes on the dole for the first few months would then be removed. I am sure that if Lord Beveridge were listening to these remarks he would agree with that suggestion.
Changes of that sort would do much to preserve a real and vital factor in the minds of the unemployed—their self-respect, because without self-respect the task of finding a new job is very much more difficult. As the Commission's latest annual report says:
What the unemployed want most of all is not better benefits. They want jobs, and they are perfectly capable of working.
Another important factor in finding a job is mobility. That is why we Conservatives are delighted to see the publication of the Housing Bill, which will add greatly to mobility through the sale of council houses. However, some of us are rather disappointed that it has taken until now for the Government to bring forward proposals on the sale of council houses.
I live in a constituency in Bristol where for 18 years the council sold council houses. The other day, for purely dogmatic reasons, it reversed that policy. Now, council tenants in Bristol cannot buy their council houses. I am sure that Conservative Members condemn that action.
While on the subject of housing, I should like my right hon. Friend's views on the problem of fuel costs and related benefits. The cost of fuel has risen dramatically since 1973, and it will go on rising. At the same time, there is terrible confusion about the many and varied fuel discounts and discretionary payments made under the umbrella of the supplementary benefit scheme to help poorer families. Could we not have one comprehensive scheme of rebates or bonuses to give help to poorer families?
In the village of Shirehampton, in my constituency, there are tower blocks, and 211 families live in those flats. They are heated by thermostatically controlled, under-floor electric heating. In most cases, those flats are either too hot or too cold. The heating is unsatisfactory, and it is costly. Those families cannot


afford it, as a result of which they are placed in a "heating poverty trap", About 20 per cent. of them are single-parent families. If we had a comprehensive system of fuel rebates, in many ways they would be helped to overcome this short-term difficulty.
We are all aware that this is a no-cost Bill. It is a shuffling around of the sheckels. Some will lose and some will gain, but I welcome it because I hope that it is the first stage in a much needed programme of reform that will make our Welfare State more efficient and fair. However, let us not forget that we can provide for the needs of the more unfortunate and deprived only if our economy first generates the wealth to pay the bill. I am a passionate believer in free enterprise. That is the only way that I can see of preserving a free and compassionate society.
With those words, I heartily endorse the Bill and commend it to the House.

9 pm

Mr. Reginald Freeson: I wish first to deal with the change in the uprating linking system proposed in clause 1, which has caused much controversy on both sides of the House. The Government intend to end the link between annual pensions uprating and the national increase in income, which has caused much criticism on both sides of the House and outside. With the greatest respect to the Secretary of State, whatever his views about the present system, he cannot believe that the choice that he has made is right.
It has been made clear that, had that system been operated over the past few years, it would have meant £5 off the weekly pension. However, it is more important to consider the effect of clause 1 on future levels of pension, and the Secretary of State has given no indication of that. His officials must have done the calculations, and he knows that within a few years pensioners could be losing about £4 a week, and that will rise steadily to a weekly loss of over £8.
The effect of Government policy can be simply demonstrated. The 1980 retirement pension for a married couple will be £37.30 a week. If living standards—pay increases less price increases—rise by 1 per cent. per year over the next 10 years, the 1990 pension will be £41.20 a week,

and without the pay link pensioners will be worse off by £3.90. If living standards rise by 2 per cent. per year over that period, the 1990 pension will be £45.50 a week, and without the pay link pensioners will be worse off by £8.20 a week. That is on 1979–80 figures.

Mr. Bowden: I did mete out criticism to my right hon. Friend the Secretary of State for Social Services, but I do not think that the hon. Gentleman is being fair. I do not think that he listened to what the Secretary of State said in opening, when he made it clear that it was the absolute minimum that the Government would do, and the right hon. Gentleman is assuming that the minimum would apply over a period of years, but I do not believe that it would. Our record shows that we will do a lot more than that minimum, and the right hon. Gentleman's figures are not valid.

Mr. Freeson: I have the greatest respect for the hon. Gentleman, not just for his speech tonight but generally for his work in social services. I ask him to be patient. I am not leaving aside other aspects. Whatever may have been past experience—and he fairly comments on it—although there has not been a statutory requirement to link pension uprating with income increases, there has been a relationship in practice. Under whatever Government, the country was operating under a somewhat different political mood than at present, as I think in his heart he will accept. I am speaking not merely of the economic situation but of the political mood that is governing this country and attitudes to public expenditure and welfare. They have changed. In the future, we cannot rely, as we may have done in the past, on the good will of the Government collectively. I make no personal comment about the Secretary of State.
In this season, as I have already hinted, one should be particularly charitable. Therefore, I am charitable towards the Secretary of State tonight. He probably fought for a more sensible change, if change there must be, of uprating in line with increased earnings. That would have ensured by law that pensioners at least maintained their relative position as living standards rose generally, provided that they were protected when prices rose more than pay. Nevertheless, the Prime


Minister and the Chancellor of the Exchequer, backed by Cabinet Ministers who are narrow in ideology and weak in argument, won the battle for yet another public expenditure cut.

Mr. Marlow: Mr. Marlow rose—

Mr. Freeson: I shall give way to the hon. Gentleman in a moment or two.
Will matters stop there? After seven months of vandalism in the public services, with the hatchet brandished again at the last meeting of the 1922 Committee a week or so ago, we cannot be optimistic.
If there is to be another round of spending cuts, as we read every week—almost every day—in the press, do the Government intend to abandon statutory uprating of benefit altogether in relation to prices as well as earnings? I would gladly give way now so that the Secretary of State could give the House an assurance on that. It is a matter that goes beyond the Bill.

Mr. Marlow: Mr. Marlow rose—

Mr. Freeson: I shall not give way to the hon. Gentleman. I am putting a specific question to the Secretary of State.
The Labour Government's method of uprating in line with the higher rate of pay and price rises ensured that pensioners, widows, industrially disabled and other beneficiaries shared in the rising standard of living experienced by employed people. It enhanced their living standards, relative to employed persons, when inflation outran rising incomes. That produced a ratchet effect. However, is that as much of a problem as the Government and others have made it out to be?
In the debate on the Queen's Speech on 13 June the Secretary of State said:
the statutory obligation to uprate…in line with either prices or earnings, whichever is the higher, is not sustainable in the long term."—[Official Report, 13 June 1979; Vol. 968, c. 438.]
In the course of time, the present method may well become redundant as the Pensions Act 1975 comes fully into effect. However, that is years away and it will be 1990 before the second tier of the State pensions scheme, the earnings-related additional pension, will pay the average person £10—at 1980 rates—on

top of the basic pension. At that time, it might be correct to get rid of the rachet effect.
I have another basic objection to altering the present statutory obligation of uprating. There is an implied assumption by some of its critics that the present relationship between retirement pensions and other long-term benefits and national earnings is the right one and should not be allowed to creep up via the ratchet effect. That assumption must be rejected. The TUC—not alone—is pressing for pensions of one-third for single persons and for a couple one-half of gross average earnings. The national average wage now runs at over £100 a week. That would mean crediting in, as the TUC describes it, to the new earnings-related scheme, the scheme which has been urged for existing pensioners and those retiring during the early years of the new scheme.
Whether the Government accept these proposals is not a matter for today's debate. Can it be denied that the present relationship between pensions and other benefit scales to earnings generally is unsatisfactory? If it is accepted that it is unsatisfactory, the ratchet effect is beneficial, and not damaging, to our social security system.
With respect to the Secretary of State, references to the article by Tony Lynes, and to other exchanges that may have taken place in connection with the ratchet effect, have not been completely accurate. As I recall, in the article in New Society which the Secretary of State quoted in the Budget debate, and which was referred to in the press conference on the Bill, it was urged that one could get rid of the ratchet effect without denying the need to relate, as appropriate, uprating to either earnings or price increases, according to which was appropriate over a period of time. There was no suggestion—as the Secretary of State has suggested in the House and elsewhere—by Mr. Lynes that he supported the Bill. He has never supported it. On the contrary, he is strongly opposed to it.

Mr. Patrick Jenkin: I do not know the opinion of Mr. Lynes on the Bill. I have never attempted to argue that Mr. Lynes's article supported the Government's policies. I said that Mr. Lynes at least recognised the problem. The right


hon. Members for Salford, West (Mr. Orme) and for Norwich, North (Mr. Ennals) have not recognised the problem. The right hon. Member for Brent, East (Mr. Freeson) has at least recognised the problem.

Mr. Freeson: I have not recognised that there is a problem. The right hon. Gentleman was not listening to what I said. I said that the Government have overstated what they describe as a problem. There is not a problem. I have stated and argued that there is a beneficial effect. I believe that it is accepted by most people that the relationship between basic pension and other benefit scales to national earnings is not right at present. It is too low. If we add the creeping-up as a result of the ratchet effect, that is beneficial to the social security system, not damaging.
These matters are not really concerning the Government. They are concerned by the fact that each 1 per cent. saving on the uprating amounts to £130 million, in effect robbing pensioners and others by that amount. If prices rise by 10 per cent. and earnings rise 12 per cent., the Government's uprating method saves £260 million. That is what is in the mind of the Government—or at least in the mind of the Treasury, whatever may have been the original wishes of the Secretary of State for Social Services. This is not a no-cost Bill. It is merely a cost-cutting Bill. Those who can least afford it will once more carry the heaviest burden of Government economies.
That will also be the case if child benefit is not increased next April. That point has been made by a number of hon. Members today, and not for the first time. There has been a decision. Let there be no mistake about that. Another mean decision has been made, not publicly announced, but shrouded by misleading statements in the House and elsewhere. We are entitled to ask the Secretary of State to tell us tonight, and to tell the country, whether there will be an uprating in child benefit in April. That must be known now. I believe it takes about 20 weeks—my right hon. Friend the Member for Salford, West (Mr. Orme) will be able to confirm that or correct me—to operate the system. The beginning of April is only three months away. Three months is well below the normal administrative time re-

quired to implement the increase in child benefit, if there is to be one.
We can therefore only assume, from the answers or the non-answers that some of us have had from the Secretary of State in the House and in correspondence with him, that a decision has been taken not to uprate, and that there is a refusal to announce it to the House and to the public. If I am wrong, I shall gladly give way and allow the Secretary of State to correct me and say that there is still a possibility or, better still, that there will be an uprating in child benefit next April.

Mr. Paul Dean: I am amazed that the right hon. Gentleman has the effrontery to stand at the Dispatch Box and talk about deception. Does he recognise that the Government of whom he was a member, although professing to uprate the main benefits in relation to earnings, totally failed to do so, and that pensioners had to take the Government to court to try to get their rights recognised? Does he not understand that this Government are being honest in producing a system which is related to a clear index? That is far more clear and honest than what the previous Government were doing in practice.

Mr. Freeson: The hon. Gentleman is wrong on both counts. What he says is untrue. There was an uprating which took account of any shortfall. That has been made perfectly clear. What is more, I happened to be talking, when the hon. Gentleman intervened, about child benefit. Indeed, if I may remind him Parliamentary Private Secretaries usually keep quiet in debates.
We are entitled to ask the Secretary of State to tell the House whether there is to be an uprating in child benefit in April. That is now 12 or 13 weeks away. If we do not get that answer, we must assume that there has been a secret decision and no announcement made of it. of it.

Mr. Peter Bottomley: Although the right hon. Gentleman knows that I totally support him on the question of the child benefit increase, we should hold open to the Government the opportunity of raising child benefit within a week. Child benefit has the advantage of being a specific sum paid by means of a specific book, and any


post office has only to pay out the increased sum.

Mr. Freeson: I wish that it were so. I wish that I could come back to the Dispatch Box towards the end of March and ask the Secretary of State "Can you tell me whether in one week's time there will be an uprating in child benefit?". Unfortunately, that is not practicable. Anyone who knows anything about the subject will appreciate that. That is why it is urgent to press the point now, and that is why I am sticking to it. I have had some rather frustrating correspondence and exchanges in the Chamber. The Secretary of State will forgive me if, even in this charitable season, I am a little persistent in the matter. He could solve the problem by answering my question now. I shall gladly give way to him if he is prepared to do so. It is apparent that he is not. I give way instead to the hon. Member for Northampton, North (Mr. Marlow).

Mr. Marlow: I am very grateful to the right hon. Gentleman for giving way. When the Labour Party was last in power, the proportion of public expenditure on social security benefit, pensions and so on, increased from 20 per cent. to 26 per cent. It increased in real terms by £4,000 million. If the same were to happen under the present Government, we should have to find another 10p by means of VAT or put another 10p on income tax. It is the belief of many Conservative Members that if we introduced that sort of regime it would be entirely counterproductive in terms of the production of wealth, on which all these systems are dependent. Will the right hon. Gentleman comment on that?

Mr. Freeson: Not this evening, although I shall be glad to do so on another occasion. This is a debate on a rather narrower subject than the whole area of public expenditure or the running of the economy generally. I must resist the temptation to make acid comments on aspects of Government policy other than those with which we are concerned tonight. As we are clearly not getting an answer to the question on child benefit, I shall turn now to something else.
If the Government are to end indexing for benefits—and once more I shall gladly give way to the Secretary of State should

he care to answer the question that I put to him earlier on this subject—the irony is that there will be still more people coming on to supplementary benefit, if these rumoured policies, leaked from various quarters other than the DHSS, no doubt, turn out to be true.
It is quite clear that the present massive dependence on supplementary benefit is one of the two major shortcomings of the system. The other is the failure of a system such as our national insurance scheme to provide claimants with a decent minimum income to ensure, in the words of the Supplementary Benefits Commission,
normal participation in the life of the relatively wealthy society in which they live".

Mrs. Elaine Kellett-Bowman: Will the right hon. Gentleman give way?

Mr. Freeson: Let me pursue this, as there are a number of points that I want to get on the record.
There are other serious shortcomings. There is the failure to relate the supplementary benefits scheme to our social security system, the failure to co-ordinate these systems with a whole variety of financial support schemes in education, job training—[Interruption.]

Mrs. Kellett-Bowman: Mrs. Kellett-Bowman rose—

Mr. Freeson: No, I shall not give way.
There is the failure to co-ordinate housing and social services; failure to co-ordinate the variety of services to individuals and the community at local level; for example, co-location of DHSS social service offices, national insurance offices and jobcentres and other services; failure to consider the potential role of our system of social assistance with social and other services in economic regeneration for deprived areas and groups. On none of these issues do the Government show any sense of direction.
The White Paper to which this Bill relates is a disgrace to any Government with pretensions to thinking through policies for the future, and informing Parliament and the public. I find it difficult to recall such a thin policy document on any topic previously produced. "Social Assistance", the review of the supplementary benefits scheme, recognised that.


the social assistance scheme in this country is having to play a role for which it was neither originally designed nor subsequently adapted
and it concluded:
either the number of claimants must be reduced to the much lower level at which discretion could be properly administered on an individual basis; or the scheme must be adapted to its mass role.
The White Paper admits in paragraph 6:
The obvious way to reduce the load on the supplementary benefits scheme would be to remove large numbers of people from dependence on it by increasing other social security benefits.
But it rejects this choice because of cost and goes for adapting the scheme to its present mass role.

Mrs. Kellett-Bowman: Mrs. Kellett-Bowman rose—

Mr. Freeson: No.
However welcome quite a number of the Government's proposals are, this cannot be accepted. Again, in the words of the Supplementary Benefits Commission in response to the original review:
If the reform of the scheme is to be worth-while, and if the living standards of claimants generally are to be protected and improved, it follows that the 'no-cost' assumptions adopted in the Review Report must be rejected.".
In my view, this is fundamental. The Government argue that we cannot afford the cost, but this is as much a question of transferring resources as of increasing them.

Mrs. Kellett-Bowman: Mrs. Kellett-Bowman rose—

Mr. Freeson: Indeed, as poverty is largely relative, it could be argued that a sharply inegalitarian society which increasingly expands consumption at the upper end of the economy automatically sharpens poverty at the lower end as material needs and demands are forced up and social relationships in the family and neighbourhood are weakened by the urban changes associated with rising standards. That is bound to happen. There are here underlying issues which will be sharpened by the social and political divide which is now opening up in Britain under this Government.
More specifically, in this year's Budget the Government have transferred £3,500 million to better-off people, are threatening public and social services up and down the country, and are increasing un employment, while at the same time they are arguing that there are not enough resources to give the unemployed, lone

parents, poor children, disabled people and pensioners a decent minimum income. I do not question that there are major problems of resources and priorities which we shall all have to face more rigorously than in the past, the Labour movement as well as anybody else; but this underlines rather than denies the need for a Government programme of objectives which could be achieved in stages, so that the impact on public expenditure levels and employment will be gradual over a period of years.
No Government can act overnight, but there can be changes which would advance things for the long-term unemployed and for one-parent families in particular. We are entitled to ask the Government to tell the House whether it is intended to reduce dependence on supplementary benefit. If the answer is "Yes", may we be told what the strategy will be, at least at some stage?
The Labour Government started down that road—I say no more than that—with the Social Security Pensions Act 1975 which will eventually, as the phrase goes, float the vast bulk of pensioners off the supplementary benefit scheme. But I must say this, too: if we want to act quickly in the area of the long-term unemployed, child benefit and the like, it is perfectly possible to handle this if we abolish the cut-off point of national insurance contributions which, I understand—according to figures that were recently given to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), according to Hansard—would produce something of the order of £800 million a year in additional resources for use in the areas of insurance and welfare.
That prospect was not touched on in the debate. I trust that it will be taken seriously as a means of achieving the resources that are required. It is inexcusable that the one enormous omission from the present proposals is the failure to allow the long-term unemployed ever to receive the long-term rate of supplementary benefit. The SBC stated explicitly in paragraph 3.20 of its 1978 annual report:
This discrimination against the unemployed and their families is wrong, and its removal is our highest priority for the improvement of the supplementary benefit scheme.
I trust that in the seventh year, 1980, the Secretary of State—who has been referring to six years of non-action—will take


action, as the Supplementary Benefits Commission urged in its annual report. I understand that it will cost about £40 million a year to do so. The Government should announce tonight their intention to do so or, as soon as may be, in Committee. Our objective should be that the long-term unemployed should be paid at the higher rate of contributory benefit after six to nine months' unemployment and until suitable emploment is found.
We must return to the question of child benefit. It must be significantly increased in the near future. That will be the largest single contribution to an antipoverty programme and will enable large numbers of lone parents in particular to come off supplementary benefit. That is the second single biggest group on supplementary benefit today. If the Government claim that resources are not available for these urgent measures, they have the answer in their hands. As I indicated, £800 million a year could be achieved as an additional resource by abolishing the earnings ceiling on social security contributions.
If the Government reject these proposals and fail to indicate their firm intention to end a mass role for the supplementary benefit scheme, they will be confirming that they have no sense of strategy for the future, unless it be to undermine the Welfare State. There is all the more reason, therefore, for our misgivings over the proposed abolition of the Supplementary Benefits Commission. I shall not go into that matter at any great length as it was discussed by other hon. Members and I wish to allow reasonable time for the Minister to reply to the debate.
The role of the Supplementary Benefits Commission, contrary to the intentions of the Bill, should be retained. It should be widened so that it covers an advisory and study capacity covering the whole area of social policy in Government, across departmental boundaries and indeed across the boundaries between Government and local government. That was the original intention in creating the DHSS, and indeed in creating the Secretary of State for Social Services, who was to look well across the border and not confine himself to health and social security matters.
It is my hope that there will be a powerful Supplementary Benefits Commission with a much wider remit than is at present allowed to it. That would take the Commission into wider areas. It would come up with excellent material and recommendations which would, in the end, lead to the wider role that the Secretary of State for Social Services in any Government should undertake, and should be allowed to undertake. He should look well beyond his Department into areas that are closely related—housing, education, financial support, support systems for employment training, and a variety of areas that are now virtually excluded from his responsibility except in the usual inter-departmental consultations that are allowed in Government. Those are the reasons—put very briefly and inadequately, I accept—for wanting to see the retention of a successful organisation and the expansion of its role along those lines.

Mr. Steen: Is the right hon. Gentleman aware that the new proposal may be better, and that there is no point in retaining something, that may have outlived its useful purpose?

Mr. Freeson: No, otherwise I would not be arguing as I am. I do not believe that the Bill provides a stronger and more powerful potentiality. I put these thoughts seriously to the Minister. I hope that they will not be rejected out of hand, and that we shall have an opportunity of discussing them at greater length and in greater depth when the Bill reaches Standing Committee and later.

9.30 p.m.

The Minister for Social Security (Mr. Reg Prentice): The Bill presents to the House a package of sensible, modest and practical social reforms, with the exception of clause 1, which is clearly controversial.
There is no reason why anything in the Bill should have been the subject of heated political debate. It is something of a tragedy for Parliament that the present hysterical state of the Labour Party seems to require it, on a Bill such as this, to indulge in the series of hysterical and exaggerated cliches that have run through so many of the speeches today, which came to a crescendo in the pompous and


strident speech to which we have just listened.
I recognise, however, that clause 1 is controversial and that the controversy crosses party lines. It has been attacked in an eloquent and courageous speech by my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden), as well as by Opposition Members. It has also been attacked outside, not only by the usual stage army of the Left but by such organisations as Age Concern—

Mr. Foulkes: Mr. Foulkes rose—

Mr. Prentice: No, I will not give way at the moment. A lot has been said in this debate and I do not intend to give way too often.
As I said, I accept that clause 1 is controversial, but I believe that the case for it has been made and I should like to develop it. Whoever is attacking this proposal, it is not the pensioners. I have not had a single letter from a pensioner attacking these proposals, and I challenge other hon. Members to say whether they have. If we are told, as we were in the speech of the right hon. Member for Norwich, North (Mr. Ennals), that that is because the pensioners have not yet realised what is in the Bill, I say that we should look at the correspondence that we have had from pensioners over many years.
During the years that I have been a Member of the House, whether as the Member for Newham, North-East or for Daventry, I have had hundreds of letters from pensioners expressing their concern about pensions under both Labour and Conservative Governments. What have they put to me? They have said to me that in their view—

Mr. Ennals: Mr. Ennals rose—

Mr. Prentice: No, I will not give way. This is getting a little too monotonous.

Mr. Ennals: Mr. Ennals rose—

Mr. Prentice: Very well, I shall make an exception of the right hon. Gentleman.

Mr. Ennals: Is the Minister saying that he and his right hon. Friends have not had representations from Age Concern England, Help the Aged, or the National Association of Pension Funds? Is he saying that all those who represent

pensioners in this country have not made protests against this recommendation?

Mr. Prentice: We have not had representations from the National Association of Pension Funds, but we have had representations from the other organisations to to which the right hon. Gentleman referred. However, what I said was that in my capacity as a Member of Parliament I have not had a single representation from a pensioner, and I believe that that is the general experience of all hon. Members. What I was about to go on to say was that it is folly to give way, because it puts one back in time and there are other points to which one does not reply.
Over many years pensioners have written to me expressing concern about the relationship between their pension and the cost of living. They have complained that a particular uprating was too low in relation to prices, or expressed anxiety, when a pension uprating was announced in the Budget, about the extent to which prices would rise between the Budget and the following November. Sometimes they have asked me how long it would be before inflation ate away at the value of the increase they had had. The concern of pensioners is that their pension should keep pace with prices, and that is guaranteed and safeguarded by clause 1 of the Bill.
I ask the House to consider the fact that clause 1 lays down a minimum level for uprating of pensions. The Opposition have been arguing as though this was a maximum level. That is a dishonest argument. They know that successive Governments—Conservative and Labour—have uprated pensions over and over again more than they were required to do by the rise in the cost of living or by other statutory requirements. Every time the Opposition spokesmen trot out the argument that pensions are now £5 higher than they would have been had clause 1 been the law since 1975, they are using the argument as if the rules in clause 1 were the maximum. I repeat that they are the minimum.
During the period of the Conservative Government from 1970 to 1974 the cost of living rose by 40 per cent. and pensions by 55 per cent. There was no statutory requirement to put them up by more than the cost of living, but they were put up


by more. A month ago pensions were uprated by 19½ per cent.—more than was required by the rise in either prices or earnings. It is a totally false argument to assume that the minimum level laid down in clause 1 is necessarily the maximum level for the future.
The purpose of the change is to restore to Ministers the choice that Ministers should exercise. It is the Government of the day, subject to the approval of the Parliament of the day, who make the decision on whether and by how much pensions should be raised over and above the statutory minimum in clause 1. Without the change we have the ratchet effect that has been discussed so often. Without it we have the automatic increase over a number of years, higher than either the rise in prices or earnings over that period. That point was put to the House very well by my hon. Friend the Member for Woolwich, West (Mr. Bottomley).
With the ratchet effect pensioners' income rises automatically as a share of the gross domestic product, whether that goes up or not. Since 1975 pensioners' incomes have gone up as a share of a static GDP. They will go up whether the GDP rises, is static or even falls, presenting an automatic increase in the burden on those at work, even at the same time as contributions are increasing because of the impact of the graduated scheme. This has pre-empted a larger and larger share of public expenditure. It has pre-empted resources that might have been required for the expansion of the Health Service, the education service or other social services, which are badly needed by the elderly themselves. That is an ironic by-product of the ratchet system. Elderly people needing hospital treatment or local authority social services may find that those services are not available to them because so much public expenditure has been pre-empted for this one purpose.
I repeat that clause 1 restores to Ministers the duty of making a choice. That is what being a Minister is all about. It restores to Parliament the duty to give a judgment on that choice, and that is what Parliament should be about. I submit to the House that the clause replaces a system that is constitutionally unsound, economically damaging and socially unjust.

Mr. Ennals: Mr. Ennals rose—

Mr. Foulkes: The Minister said that he had not received any representations against the iniquitous clause 1. Will he indicate who has been writing to him saying how wonderful is clause 1, apart from Conservative sycophants?

Mr. Prentice: I have neither had, nor would expect, letters to that effect. The hon. Gentleman could have helped the House by saying what letters he has had on the subject. I shall give way gladly to any hon. Member who can quote from a letter from a pensioner in his constituency who objects to clause 1.
The use of the word "iniquitous" is one more example of the silly, exaggerated language that we have been hearing from the Opposition throughout the debate.

Mr. Ennals: Mr. Ennals rose—

Mr. Prentice: The hon. Gentleman has spoken to the House already. I beg him to listen with some degree of courtesty.
Another symptom of the Opposition's hysteria is that they are behaving less and less like parliamentarians and more and more like soccer hooligans.

Mr. Ennals: Mr. Ennals rose—

Mr. Prentice: The simplification of the supplementary benefit package, which is the other main purpose of the Bill, is a matter of urgency. The need for it was spelled out originally in the consultative document "Social Assistance", produced under the aegis of the previous Government about 18 months ago.

Mr. Orme: Answer the questions.

Mr. Prentice: The right hon. Gentleman asked, from a sedentary position, whether I will answer the questions. I am answering some of his. [HON. MEMBERS: "Answer."] If the racket quietens I shall continue with my speech. I shall continue in my own way. I shall not be told by the Opposition how to conduct myself.
The consultative document invited comments. Comments came from the SBC and many other sources. They were all agreed on the need for reform and simplification of the system. The reasons for that have been given often, and again in the debate.
The existing system is, in many ways, a jungle of confusion. It is a system which


claimants, almost universally, find impossible to understand. It is a system that, as the hon. Member for Truro (Mr. Penhaligon) reminded us, Members of the House find difficult, if not impossible, to understand. It is a system which officers of the Department who administer it often find impossible to understand, especially in the local offices where there is a rapid changeover of staff.
We have a system for about 5 million people who are among the weakest and most vulnerable members of our society. It will not do to continue with the present system without carrying out the maximum degree of reform and simplification that we can manage, but subject to one over riding requirement—

Mr. Joseph Ashton: To save money.

Mr. Prentice: The hon. Gentleman is getting warm. When he said "To save money" I was about to say that the requirement was a reform on a nil cost basis. In other words, there is nothing overall in the Bill affecting the supplementary benefit package—I am now talking not about clause 1 but about the supplementary benefit package—which reduces expenditure on it. The Bill is not designed to save money, but equally it is not designed to spend extra money. That has been implicit throughout the operation.

Mr. Andrew F. Bennett: Mr. Andrew F. Bennett rose—

Mr. Prentice: This is the point on which—

Mr. Bennett: Mr. Bennett rose—

Mr. Speaker: Order. The Minister has already indicated that he is not giving way to hon. Members. Therefore, everyone must remain in his seat.

Mr. Prentice: If Labour Members were treating me with the courtesy that should be customary in the House, I should give way. In the circumstances, I do not propose to give way during the rest of my speech. Labour Members will not succeed in their efforts to shut me up, because I can shout as loudly as that lot put together any time they like to take me on.
During the gestation of this reform—about 18 months—the Labour Government were in office for nearly 10 months

and the Conservative Government have been in office for slightly over seven months. During the whole of that period the basic working assumption has been—on this I challenge the Opposition as I have done in the past, but they have not chosen to face it—that the changes would be made on a nil cost basis. That has been the assumption of the DHSS and of the Treasury. It has been the assumption of hon. Members on both sides of the Chamber who have an understanding of these problems.

Mr. Frank Dobson: That excludes you.

Mr. Prentice: The pressure groups have made representations. They have suggested a different package that would include extra spending on some people's needs without cutting spending on others to allow the Government to afford the extra spending. They speak for their members, or those whom they support. They campaign and pressurise Governments. They pressurise the House for extra expenditure. That is in the nature of pressure groups. However, the duty of hon. Members on both sides of the Chamber is to take a total view of the national economy, and a responsible view.

Mr. Robin F. Cook: Mr. Robin F. Cook rose—

Mr. Prentice: It is precisely that—

Mr. Cook: Mr. Cook rose—

Mr. Speaker: Order. I remind hon. Members that the Minister has said that he is not giving way during the rest of his speech. [Interruption.] Order. That is up to the Minister.

Mr. Cook: On a point of order, Mr. Speaker. You will be aware that you are the custodian of the traditions of the House. One of the traditions is the cut and thrust of debate. Is it compatible with that tradition for a Minister to reply to a debate with a rehearsed text and not be prepared to give way to hon. Members?

Mr. Speaker: That has happened many a time since I have been here.

Mr. Prentice: It has been my custom as a Member of this place to give way frequently during speeches that I have made from either side of the Chamber, both as a Labour Member and as a Conservative Member. However, in view of


the conduct of that pathetic mixture of Dad's Army and the Red Army on the Labour Benches, I shall not do so during the remainder of my speech.
I intend to make as much as I can of the remainder of my speech, but much will be truncated and many points will remain unanswered because of the atrocious manners and because of the unparliamentary conduct of hon. Members on the Opposition Benches.
Coming back to the question of nil cost, we have had—

Mr. Dobson: On a point of order, Mr. Speaker. If the Minister is accusing the Opposition of unparliamentary behaviour, was it parliamentary of him to describe them as football hooligans, particularly as he himself is the Don Revie of the House?

Mr. Prentice: I do not withdraw the term football hooligans but, on reflection, I withdraw the reference to Dad's Army. Dad's Army was at least prepared to defend Wilmington-on-Sea, whereas the so-called moderates in the Labour Party just lie down and let the extremists walk all over them. [Interruption.]
I return to the point about this package being a nil cost package. I challenge the Opposition on the point that they are as committed—

Mr. Robert Atkins: On a point of order, Mr. Speaker. Is it in order for Opposition Members to refer to my right hon. Friend as a traitor?

Hon. Members: Yes.

Mr. Speaker: Order.

Hon. Members: Renegade.

Mr. Speaker: I did not hear that expression myself. It was very difficult to hear anything. Everyone knows that it is out of order to call any right hon. or hon. Member in this House a traitor. It is incompatible with the word "honourable". Hon. Members should not call the right hon. Gentleman anything until after 10 o'clock.

Mr. Ashton: Mr. Ashton rose—

Mr. Prentice: The nil cost package—

Mr. Ashton: On a point of order, Mr. Speaker—

Mr. Speaker: Order. This is the last point of order that I propose to take while the Minister is making his speech. I have already taken three or four points of order.

Mr. Ashton: On a point of order, Mr. Speaker. You said, Mr. Speaker, that it was out of order to call the right hon. Member a traitor. I admit that I was one of several hon. Members on this side who called the Minister that name.

Mr. Speaker: Order. In that case the hon. Gentleman must withdraw the expression.

Mr. Ashton: I ask your guidance, Mr. Speaker, on what is the name for someone who brings down the Government—

Mr. Speaker: Order. The whole House knows that it is an unparliamentary expression. If the hon. Gentleman, as he tells us, used it, he must now withdraw it.

Mr. Ashton: With respect, Mr. Speaker, I will withdraw it and substitute "political Judas."

Mr. Prentice: I repeat, Mr. Speaker, that the Opposition are as committed as the Government to the concept of the nil cost package in the reform of the supplementary benefits scheme. To come to the Dispatch Box, as both Opposition Front Bench speakers did in this debate, and suggest that unemployment benefit should be paid at the higher rate, which would cost £65 million a year, and to make other suggestions, as they and other hon. Members did, that would cost more money, without coming forward with a single suggestion for the saving of money, is not an honest approach to the problem.
The Opposition are abandoning even the inadequate financial disciplines of the Labour Government. They are coming forward, as they have done week after week and night after night in debates since May, urging this Government to spend more of other people's money without saying where the money is to come from.
The right hon. Member for Down, South (Mr. Powell) raised some interesting and important points about the relationship of the new advisory committee to Ulster. We shall consider those points carefully between now and Committee. I think that we can go a long way to meet them.
The hon. Member for Barking (Miss Richardson) raised certain important points about equality of treatment of men and women claimants arising from the EEC directive. I assure the hon. Lady that the clause meets the EEC directive in full. It does not go further than the directive—she was asking in some respects for it to go further—but it goes as far as the directive.
As for the word "similar", the hon. Lady asked why we did not use the word "equal". There are some inequalities built into our social insurance system. For example, there is a different retirement age for men and for women. Therefore, the word "equal" would not be appropriate. The word "similar" means that we shall attain the maximum degree of equality required of us by the EEC directive.
This system will provide for more open government—

Mr. Freeson: Mr. Freeson rose—

Mr. Prentice: —and more open government—

Mr. Freeson: Mr. Freeson rose—

Mr. Speaker: Order. I think that I need say for the last time that the Minister is not giving way.

Mr. Prentice: Mr. Prentice rose—

Mr. Freeson: Mr. Freeson rose—

Mr. Speaker: Order. It is discourteous for a Member to rise when I have already said that the Minister is not giving way.

Mr. Freeson: Mr. Freeson rose—

Mr. Speaker: Order. Everyone is entitled to speak here. If Members wish to give way, they can give way. But if they do not wish to give way, it is up to them.

Mr. Prentice: Mr. Prentice rose—

Mr. Freeson: On a point of order, Mr. Speaker.

Mr. Speaker: Order.

Mr. Freeson: I want to develop—

Mr. Speaker: Order. I hope that the right hon. Gentleman's point of order will be brief. Otherwise, it is very unfair.

Mr. Freeson: It is a genuine point of order, Mr. Speaker. You indicated on one or two occasions that because the Minister had indicated that he was not going to give way Members should pay due attention to that fact. Nevertheless, is it in order for a Member still to seek the Minister's agreement to give way in the way that I have attempted?

Mr. Speaker: Order. Of course it is at the beginning, but when it is clear that the Minister is not giving way, the right hon. Gentleman must accept it.

Mr. Prentice: I close on the point that if anyone were to ask me tonight whether I am satisfied with the provision that this country makes for its pensioners, the answer would have to be "No." The provision has always been too low, under successive Governments. The hard fact is that the ideal of Beveridge—which was implemented after the war by a Labour Government whose leaders would not recognise the Labour Party of today—has been frustrated by the ravages of inflation—

Mr. Freeson: Mr. Freeson rose—

Mr. Prentice: —and by the—

Mr. Freeson: Mr. Freeson rose—

Hon. Members: Name him.

Mr. Speaker: Order. [Interruption.] That is the very last thing that I want to do when we are on the very edge of rising for the Christmas Recess. I hope that the Minister will be allowed to finish his speech.

Mr. Prentice: Other Western countries have shown that by making a success of a free-enterprise economy, they can do better than we are doing for pensioners, widows and the chronically sick. [Interruption.] I have enough faith in this country to believe that we can show, as they have shown, that free enterprise and a social conscience go together, and that by the success of our economic policies we can provide better standards of living for the pensioners of this country.

Question put, That the Bill be now read a Second time:—

Division No1311
AYES
10 pm


Adley, Robert
Faith, Mrs Sheila
Loveridge, John


Alexander, Richard
Farr, John
Luce, Richard


Amery, Rt Hon Julian
Fenner, Mrs Peggy
Lyell, Nicholas


Ancram, Michael
Fell, Anthony
McCrindle, Robert


Arnold, Tom
Finsberg, Geoffrey
Macfarlane, Neil


Aspinwall, Jack
Fisher, Sir Nigel
MacGregor, John


Atkins, Rt Hon H. (Spelthorne)
Fletcher, Alexander (Edinburgh N)
MacKay, John (Argyll)


Atkins, Robert (Preston North)
Fletcher-Cooke, Charles
Macmillan, Rt Hon M. (Farnham)


Atkinson, David (B'mouth, East)
Fookes, Miss Janet
McNair-Wilson, Michael (Newbury)


Baker, Kenneth (St. Marylebone)
Forman, Nigel
McNair-Wilson, Patrick (New Forest)


Baker, Nicholas (North Dorset)
Fowler, Rt Hon Norman
McQuarrie, Albert


Banks, Robert
Fox, Marcus
Madel, David


Beaumont-Dark, Anthony
Fraser, Rt Hon H. (Stafford &amp; St)
Major, John


Bell, Ronald
Fraser, Peter (South Angus)
Marland, Paul


Bendell, Vivian
Fry, Peter
Marlow, Tony


Bennett, Sir Frederic (Torbay)
Galbraith, Hon T. G. D.
Marshall, Michael (Arundel)


Benyon, Thomas (Abingdon)
Gardiner, George (Reigate)
Marten, Neil (Banbury)


Benyon, W. (Buckingham)
Gardner, Edward (South Fylde)
Mates, Michael


Best, Keith
Gilmour, Rt Hon Sir Ian
Mather, Carol


Bevan, David Gilroy
Glyn, Dr Alan
Maude, Rt Hon Angus


Biffen, Rt Hon John
Goodhart, Philip
Mawby Ray


Biggs-Davison, John
Goodhew, Victor
Mawhinney, Dr Brian


Blackburn, John
Goodlad, Alastair
Maxwell-Hyslop, Robin


Blaker, Peter
Gorst, John
Mellor, David


Body, Richard
Gow, Ian
Meyer, Sir Anthony


Bonsor, Sir Nicholas
Gower, Sir Raymond
Miller, Hal (Bromsgrove &amp; Redditch)


Boscawen, Hon Robert
Grant, Anthony (Harrow C)
Mills, lain (Meriden)


Bottomley, Peter (Woolwich West)
Gray, Hamish
Mills, Peter (West Devon)


Boyson, Dr Rhodes
Greenway, Harry
Miscampbell, Norman


Braine, Sir Bernard
Grieve, Percy 
Mitchell, David (Basingstoke)


Bright, Graham
Griffiths, Eldon (Bury St Edmunds)
Moate, Roger


Brinton, Tim
Griffiths, Peter (Portsmouth N)
Monro, Hector


Brittan, Leon 
Grist, Ian 
Montgomery, Fergus


Brocklebank-Fowler, Christopher
Grylls, Michael
Moore, John


Brooke, Hon Peter
Gummer, John Selwyn
Morgan, Geraint


Brotherton, Michael 
Hamilton, Michael (Salisbury) 
Morrison, Hon Charles (Devizes) 


Brown, Michael (Brigg &amp; Sc'thorpe)
Hampson, Dr Keith
Morrison, Hon Peter (City of Chester)


Browne, John (Winchester)
Hannam, John
Mudd David


Bruce-Gardyne, John
Haselhurst, Alan
Murphy, Christopher


Bryan, Sir Paul
Havers, Rt Hon Sir Michael
Myles, David


Buchanan-Smith, Hon Alick
Hawkins, Paul
Neale,Gerrard


Buck, Antony
Hawksley, Warren
Needham, Richard


Budgen, Nick 
Hayhoe, Barney
Nelson, Anthony 


Bulmer, Esmond
Heddle, John
Neubert Michael


Burden, F. A.
Henderson, Barry
Newton, Tony


Butcher, John
Heseltine, Rt Hon Michael
Normanton, Tom


Butler, Hon Adam
Higgins, Rt Hon Terence L.
Nott, Rt Hon John


Cadbury, Jocelyn
Hill, James 
Onslow, Cranley 


Carlisle, John (Luton West)
Hogg, Hon Douglas (Grantham)
Oppenheim, Rt Hon Mrs Sally


Carlisle, Kenneth (Lincoln)
Holland, Philip (Carlton)
Osborn, John


Carlisle, Rt Hon Mark (Runcorn) 
Hooson, Tom 
Page, John (Harrow, West) 


Chalker, Mrs. Lynda
Hordern, Peter
Page, Rt Hon R. Graham (Crosby)


Channon, Paul
Howe, Rt Hon Sir Geoffrey
Page, Richard (SW Hertfordshire)


Chapman, Sydney
Howell, Rt Hon David (Guildford)
Parkinson, Cecil


Churchill, W. S.
Hunt, David (Wirral)
Parris, Matthew


Clark, Hon Alan (Plymouth, Sutton)
Hunt, John (Ravensbourne)
Patten, Christopher (Bath)


Clark, Dr William (Croydon South)
Hurd, Hon Douglas
Patten, John (Oxford)


Clarke, Kenneth (Rushcliffe) 
Jenkin, Rt Hon Patrick
Pattie, Geoffrey


Cockeram, Eric
Jessel, Toby
Pawsey, James


Colvin, Michael
Johnson Smith, Geoffrey
Percival, Sir Ian


Cope, John
Jopling, Rt Hon Michael
Peyton, Rt Hon John


Cormack, Patrick
Joseph, Rt Hon Sir Keith
Pink, R. Bonner


Costain, A. P.
Kaberry, Sir Donald
Pollock, Alexander


Cranborne, Viscount
Kellett-Bowman, Mrs Elaine
Porter, George


Critchley, Julian
Kershaw, Anthony
Powell, Rt Hon J. Enoch (S Down)


Crouch, David
Kimball, Marcus
Prentice, Rt Hon Reg


Dean,Paul (North Somerset)
King, Rt Hon Tom
Price, David (Eastleigh)


Dickens, Geoffrey
Kitson, Sir Timothy
Prior, Rt Hon James


Douglas-Hamilton, Lord James
Knight, Mrs Jill
Proctor, K. Harvey


Dover, Denshore
Knox, David
Pym, Rt Hon Francis


du Cann, Rt Hon Edward
Lang, Ian
Raison, Timothy


Dunn, Robert (Dartford)
Langford-Holt, Sir John
Rathbone, Tim


Durant, Tony
Latham, Michael
Rees, Peter (Dover and Deal)


Dykes, Hugh
Lawrence, Ivan
Rees-Davies, W. R.


Eden, Rt Hon Sir John
Lawson, Nigel
Renton, Tim


Edwards, Rt Hon N. (Pembroke)
Lee, John
Rhodes James, Robert


Eggar, Timothy
Lennox-Boyd, Hon Mark
Ridley, Hon Nicholas


Emery, Peter
Lester, Jim (Beeston)
Ridsdale, Julian


Eyre, Reginald
Lewis, Kenneth (Rutland)
Rifkind, Malcolm


Fairbairn, Nicholas
Lloyd, Ian (Havant &amp; Waterloo)
Rippon, Rt Hon Geoffrey


Fairgrieve, Russell
Lloyd, Peter (Fareham)








Roberts, Michael (Cardiff NW)
Stanley, John
Walker, Rt Hon Peter (Worcester)


Roberts, Wyn (Conway)
Steen, Anthony
Walker, Bill (Perth &amp; E Perthshire)


Ross, Wm. (Londonderry)
Stevens, Martin
Walker-Smith, Rt Hon Sir Derek


Rossi, Hugh
Stewart, Ian (Hitchin)
Waller, Gary


Rost, Peter
Stewart, John (East Renfrewshire)
Walters, Dennis


Royle, Sir Anthony
Stokes, John
Ward, John


Sainsbury, Hon Timothy
Stradling Thomas, J.
Warren, Kenneth


St. John-Stevas, Rt Hon Norman
Tapsell, Peter
Watson, John


Scott, Nicholas
Taylor, Robert (Croydon NW)
Wells, John (Maidstone)


Shaw, Giles (Pudsey)
Tebbit, Norman
Wells, Bowen (Hert'rd &amp; Stev'nage)


Shaw, Michael (Scarborough)
Temple-Morris, Peter
Wheeler, John


Shelton, William (Streatham)
Thatcher, Rt Hon Mrs Margaret
Whitney, Raymond


Shepherd, Colin (Hereford)
Thompson, Donald
Wickenden, Keith


Shepherd, Richard (Aldridge-Br'hills)
Thorne, Neil (Ilford South)
Wiggin, Jerry


Shersby, Michael
Thornton, Malcolm
Wilkinson, John


Silvester, Fred
Townend, John (Bridlington)
Williams, Delwyn (Montgomery)


Sims, Roger
Townsend, Cyril D. (Bexleyheath)
Winterton, Nicholas


Skeet, T. H. H.
Trippier, David
Wolfson, Mark


Smith, Dudley (War. and Leam'ton)
Trotter, Neville
Young, Sir G. (Ealing, Acton)


Speller, Tony
van Straubenzee, W. R.
Younger, Rt Hon George


Spicer, Jim (West Dorset)
Viggers, Peter



Sproat, Iain
Waddington, David
TELLERS FOR THE AYES:


Squire, Robin
Wakeham, John
Mr. Spencer Le Marchont and


Stainton, Keith
Waldegrave, Hon William
Mr. Anthony Berry.


Stanbrook, Ivor






NOES


Abse, Leo
Dobson, Frank
Janner, Hon Greville


Adams, Allen
Dormand, Jack
Jay, Rt Hon Douglas


Allaun, Frank
Douglas, Dick
John, Brynmor


Alton, David
Douglas-Mann, Bruce
Johnson, James (Hull West)


Anderson, Donald
Dubs, Alfred
Johnson, Walter (Derby South)


Archer, Rt Hon Peter
Duffy, A. E. P.
Jones, Rt Hon Alec (Rhondda)


Armstrong, Rt Hon Ernest
Dunn, James A. (Liverpool, Kirkdale)
Jones, Barry (East Flint)


Ashton, Joe
Dunwoody, Mrs Gwyneth
Jones, Dan (Burnley)


Atkinson, Norman (H'gey, Tott'ham)
Eadie, Alex
Kaufman, Rt Hon Gerald


Bagier, Gordon A. T.
Eastham, Ken
Kerr, Russell


Barnett, Guy (Greenwich)
Edwards, Robert (Wolv SE)
Kilfedder, James A.


Barnett, Rt Hon Joel (Heywood)
Ellis, Raymond (NE Derbyshire)
Kilroy-Silk, Robert


Beith, A. J.
Ellis, Tom (Wrexham)
Kinnock, Neil


Benn, Rt Hon Anthony Wedgwood
English, Michael
Lambie, David


Bennett, Andrew (Stockport N)
Ennals, Rt Hon David
Lamborn, Harry


Bidwell, Sydney
Evans, loan (Aberdare)
Lamond, James


Booth, Rt Hon Albert
Evans, John (Newton)
Leadbitter, Ted


Boothroyd, Miss Betty
Ewing, Harry
Leighton, Ronald


Bottomley, Rt Hon Arthur (M'brough)
Faulds, Andrew
Lestor, Miss Joan (Eton &amp; Slough)


Bowden, Andrew
Field, Frank
Lewis, Ron (Carlisle)


Bradley, Tom
Fitch, Alan
Litherland, Robert


Bray, Dr Jeremy
Fitt, Gerard
Lofthouse, Geoffrey


Brown, Hugh D. (Provan)
Flannery, Martin
Lyon, Alexander (York)


Brown, Ronald W. (Hackney S)
Fletcher, L. R. (Ilkeston)
Lyons, Edward (Bradford West)


Brown, Ron (Edinburgh, Leith)
Foot, Rt Hon Michael
Mabon, Rt Hon Dr J. Dickson


Callaghan, Rt Hon J. (Cardiff SE) 
Ford, Ben 
McCartney, Hugh 


Callaghan, Jim (Middleton &amp; P)
Forrester, John
McDonald, Dr Oonagh


Campbell-Savours, Dale
Foulkes, George
McElhone, Frank


Canavan, Dennis
Fraser, John (Lambeth, Norwood)
McGuire, Michael (Ince)


Cant, R. B.
Freeson, Rt Hon Reginald
McKay, Allen (Penistone)


Carmichael, Neil
Garrett, John (Norwich S)
McKelvey, William


Carter-Jones, Lewis
Garrett, W. E. (Wallsend)
MacKenzie, Rt Hon Gregor


Cartwright, John
George, Bruce
Maclennan, Robert


Clark, David (South Shields)
Gilbert, Rt Hon Dr John
McMahon, Andrew


Cocks, Rt Hon Michael (Bristol S)
Ginsburg, David
McMillan, Tom (Glasgow, Central)


Cohen, Stanley
Golding, John
McNally, Thomas


Coleman, Donald
Gourlay, Harry
McQuade, John


Concannon, Rt Hon J.D.
Grant, George (Morpeth)
McWilliam, John


Conlan, Bernard
Grant, John (Islington C)
Magee, Bryan


Cook, Robin F.
Hamilton, James (Bothwell)
Marks, Kenneth


Cowans, Harry
Hamilton, W. W. (Central Fife)
Marshall, David (Gl'sgow, Shettles'n)


Cox, Tom (Wandsworth, Tooting)
Hardy, Peter 
Marshall, Dr Edmund (Goole) 


Craigen, J. M. (Glasgow, Maryhill)
Harrison, Rt Hon Walter
Martin, Michael (Gl'gow, Springb'rn)


Crowther, J. S.
Hattersley, Rt Hon Roy
Maxton, John


Cryer, Bob
Haynes, Frank
Meacher, Michael


Cunliffe, Lawrence
Healey, Rt Hon Denis
Mellish, Rt Hon Robert


Cunningham, George (Islington S)
Heffer, Eric S.
Mikardo, Ian


Cunningham, Dr John (Whitehaven)
Hogg, Norman (E Dunbartonshire)
Millan, Rt Hon Bruce


Dalyell, Tam
Holland, Stuart (L'beth, Vauxhall)
Miller, Dr M, S. (East Kilbride)


Davidson, Arthur
Home Robertson, John
Mitchell, Austin (Grimsby)


Davies, Rt Hon Denzil (Llanelli)
Homewood, William
Mitchell, R. C. (Soton, Itchen)


Davies, Ifor (Gower)
Hooley, Frank
Morris, Rt Hon Alfred (Wythenshawe)


Davis, Terry (B'rm'ham, Stechford)
Horam, John
Morris, Rt Hon Charles (Openshaw)


Deakins, Eric
Howell, Rt Hon Denis (B'ham, Sm H)
Morris, Rt Hon John (Aberavon)


Dean, Joseph (Leeds West)
Huckfield, Les
Morton, George


Dempsey, James
Hudson Davies, Gwilym Ednyfed
Moyle, Rt Hon Roland


Dewar, Donald
Hughes, Mark (Durham)
Mulley, Rt Hon Frederick


Dixon, Donald
Hughes, Robert (Aberdeen North)
Newens, Stanley



Hughes, Roy (Newport)
Oakes, Rt Hon Gordon







Ogden, Eric
Rooker, J. W.
Thomas, Mike (Newcastle East)


O'Halloran, Michael
Roper, John
Thomas, Dr Roger (Carmarthen)


O'Neill, Martin
Ross, Ernest (Dundee West)
Thorne, Stan (Preston South)


Orme, Rt Hon Stanley
Rowlands, Ted
Tilley, John


Owen, Rt Hon Dr David
Ryman, John
Torney, Tom


Paisley, Rev Ian
Sandelson, Neville
Urwin, Rt Hn Tom


Palmer, Arthur
Sever, John
Varley, Rt Hon Eric G.


Park, George
Sheerman, Barry
Wainwright, Edwin (Dearne Valley)


Parker, John
Sheldon, Rt Hon Robert (A'ton-u-L)
Walker, Rt Hon Harold (Doncaster)


Parry, Robert
Shore, Rt Hon Peter (Step and Pop)
Watkins, David


Pavitt, Laurie
Short, Mrs Renée
Wellbeloved, James


Pendry, Tom
Silkin, Rt Hon John (Deptford)
Welsh, Michael


Penhaligon, David
Silkin, Rt Hon S. C. (Dulwich)
Whitehead, Phillip


Powell, Raymond (Ogmore)
Silverman, Julius
Whitlock, William


Prescott, John
Skinner, Dennis
Willey, Rt Hon Frederick


Price, Christopher (Lewisham West)
Smith, Rt Hon J. (North Lanarkshire)
Williams, Rt Hon Alan (Swansea W)


Race, Reg
Snape, Peter
Wilson, Gordon (Dundee East)


Radice, Giles
Soley, Clive
Wilson, Rt Hon Sir Harold (Huyton)


Rees, Rt Hon Merlyn (Leeds South)
Spearing, Nigel
Wilson, William (Coventry SE)


Richardson, Jo
Spriggs, Leslie
Winnick, David


Roberts, Albert (Normanton)
Stallard, A. W.
Woodall, Alec


Roberts, Allan (Bootle)
Stoddart, David
Woolmer, Kenneth


Roberts, Ernest (Hackney North)
Stott, Roger
Young, David (Bolton East)


Roberts, Gwilym (Cannock)
Strang, Gavin



Robertson, George
Summerskill, Hon Dr Shirley
TELLERS FOR THE NOES


Robinson, Geoffrey (Coventry NW)
Taylor, Mrs Ann (Bolton West)
Mr Ted Graham and


Robinson, Peter (Belfast East)
Thomas, Dafydd (Merioneth)
Mr. James Tinn.


Rodgers, Rt Hon William
Thomas, Jeffrey (Abertillery)

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Protection of Trading Interests Bill may be proceeded with, though opposed, until any hour.—[Lord James-Douglas Hamilton.]

Orders of the Day — SOCIAL SECURITY [MONEY]

Queen's Recommendation having been signified—

Resolved,
That for the purposes of any Act of the present Session to amend the law relating to social security it is expedient to authorise—
(1) the payment out of money provided by Parliament of any expenses under that Act of a Minister of the Crown and of any increase attributable to that Act in the sums payable out of such money under any other Act;
(2) the payment into the Consolidated Fund of—
(a) any sums failing to be paid into it under provisions of that Act relating to the payment from the National Insurance Fund of expenses incurred by a Minister of the Crown in connection with benefits payable out of the National Insurance Fund, and
(b) any increase attributable to that Act in the sums payable into the Consolidated Fund under any other Act.—[Lord James Douglas-Hamilton.]

Orders of the Day — PROTECTION OF TRADING INTERESTS BILL

As amended (in the Standing Committee), considered.

Clause 8

DOCUMENTS AND INFORMATION REQUIRED BY OVERSEAS COURTS AND AUTHORITIES

The Secretary of State for Trade (Mr. John Nott): The Secretary of State for Trade (Mr. John Nott) rose—

Mr. Speaker: Order. I shall call the Secretary of State in a moment, if hon. Members who are leaving the Chamber will do so quietly.

Mr. Nott: I beg to move amendment No. 1, in page 2, line 29 leave out 'or furnish'.

Mr. Speaker: With this we may take Government amendment No. 2.

Mr. Nott: In Committee, my hon. Friend the Member for Canterbury (Mr. Crouch) moved an amendment which would have extended the Secretary of State's powers to give directions under clause 2 so as to enable him also to prohibit the giving of oral evidence in response to a requirement from an overseas court, tribunal or authority. My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) supported him. I explained in reply that the Government were sympathetic to the purpose of the amendment and would consider moving an amendment to cover the point on Report. These amendments carry out that undertaking. I shall be happy to enlarge further if my hon. Friends wish me to do so.

Amendment agreed to.

Amendment made: No. 2, in page 2, line 32, leave out from first 'or' to end of line 33 and insert
'to furnish any commercial information to any such court, tribunal or authority;'.—[Mr. Nott.]

Mr. Nott: I beg to move amendment No. 3, in page 3, line 9 leave out from 'country' to 'or' in line 10.
In Committee my hon. Friend the Member for Canterbury (Mr. Crouch) moved an amendment in similar terms to this. His intention was that the Secre-

tary of State would be precluded by virtue of clause 2(3)(a) from issuing a direction only where either criminal or civil proceedings had actually been instituted in an overseas country. He argued that clause 2(3) went too far by restricting the Secretary of State's ability to issue a direction where civil proceedings were merely contemplated in the overseas country from which the requirement for information originated. This is the "fishing expedition" situation.
Having reconsidered the question, I agree that my hon. Friend was right, and it is for that reason that the Government have tabled this amendment. I can enlarge further if my hon. Friend wishes me to do so.

Mr. David Crouch: One of the merits of reporting back to the House is that sometimes one hears that the Government have done what one sought to get them to do in Committee. I am glad that my right hon. Friend listened to the proceedings in Committee and has reported to the House as he has.

Amendment agreed to.

Clause 6

RECOVERY OF AWARDS OF MULTIPLE DAMAGES

Mr. Nott: I beg to move amendment No. 4, in page 6, line 9, leave out
'through a branch or establishment in that country'.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this it will be convenient to take Goverment amendment No. 5.

Mr. Nott: It has been represented to us in the diplomatic note from the United States about the Bill that, if the exception in this subsection applies only where the activities concerned were carried on exclusively in the overseas country, the requirement that they should also be carried on through a branch or an establishment is superfluous. I agree with that, and the double test here could in some cases be needlessly severe. Our point is fully met by a requirement that the activities concerned should be carried on exclusively within an overseas country. I therefore propose to delete the reference


to a branch or establishment in clause 6(3). As I have said, that covers the point that was represented to us by the United States, and it is in that sense that I am seeking to bring forward these two amendments.

Amendment agreed to.

Amendment made: No. 5, in page 6, leave out line 12.—[Mr. Nott.]

Mr. Nott: I beg to move amendment No. 6, in page 6, line 12, at end insert—
'(4) A court in the United Kingdom may entertain proceedings on a claim under this section notwithstanding that the person against whom the proceedings are brought is not within the jurisdiction of the court.'.
This amendment is addressed to a point to which my right hon. and learned Friend the Attorney-General and other hon. Members referred in Committee. It is concerned with making the remedy of recovery under clause 6 as effective as possible. The hon. and learned Member for Abertillery (Mr. Thomas) referred to this matter.
The remedy in clause 6 is limited to certain individuals and bodies corporate that have a connection with the United Kingdom. Such persons can bring an action against another person who has obtained a multiple damage action in an overseas country, but unless that person is present within the jurisdiction of the United Kingdom courts, proceedings may not be able to be served and, unless he has assets here, a subsequent judgment may be an empty one. The hon. and learned Member for Abertillery moved an amendment in Committee that was designed to strengthen clause 6 by permitting actions between subsidiary or associated companies of the two original parties to an overseas multiple damages judgment.
We all recognise that the right conferred by clause 6 will be limited in its application. In his reply, my right hon. and learned Friend the Attorney-General said that he had sympathy with the intentions of the hon. and learned Gentleman but that the Government did not think it right to claim jurisdiction over overseas companies by virtue of the presence within the United Kingdom of subsidiary or associated companies of those companies and that that was so notwithstanding that the United States might claim jurisdiction in similar circumstan-

ces. He said that two wrongs did not make a right. On further consideration, that remains the Government's view.
My right hon. and learned Friend the Attorney-General said, however, that the Government were exploring whether the rules under order 11 of the rules of the Supreme Court should be amended to permit service of process outside the jurisdiction of the United Kingdom in a case arising under clause 6. That would not be a full answer to the considerations that were discussed in Committee of how clause 6 could be made to function as effectively as possible. Nevertheless, it is a part answer and it is one that we think can legitimately be given in view of the objections that we take to the exorbitant claims of others to jurisdiction over persons or activities within the United Kingdom and the reactive and countervailing nature of this remedy.
This amendment will therefore permit United Kingdom courts to allow service of process outside the United Kingdom inactions for claims arising under clause 6. It will be followed by appropriate amendments to the procedural rules. It is designed to enable the United Kingdom victim of a multiple damages judgment to assert his rights as fully as possible. However, once the original judgment creditor, the defendant in the clause 6 action, has been served, all the conditions specified in clause 6 will apply. The action will lie between the original parties to the overseas judgment and will not be in the wider sense in which the hon. and learned Member for Abertillery sought to suggest. No change is proposed to the basis on which any judgment claims under clause 6 can be enforced.

Mr. Graham Page: If an action has been started in that way against someone outside the jurisdiction, will it proceed if no appearance is entered?

Mr. Nott: I should explain that we were concerned to make the clause as effective as possible. On the other hand, we were equally concerned not to indulge in some of the "wrongs" for which we are criticising the United States. On that basis, we have to accept that there may be circumstances in which we cannot attach an overseas company because it is not within our jurisdiction. If the clause were greatly broadened it would commit some of the "offences" of which we


accuse other countries and, therefore, we have to keep it as limited as it is.

Mr. Jeffrey Thomas: I hope that the Secretary of State will not be churlish, having given us so much, if I criticise him in some respects. My object in putting forward the amendment as I did in Committee and, indeed, in seeking to make the points that I made on Second Reading was to ensure that clause 6 would be an enforceable clause and, therefore, a practical matter of law.
In that context, I welcome what the Secretary of State says and I am glad that he has conceded so much. However, in our view he has not gone far enough. Although the scope of recovery and jurisdiction has been enlarged to some extent, the difficulty so far as the United States is concerned still remains that it would never enforce a judgment because it would go against its public policies on anti-trust legislation. It could be argued that a company might not be in or submit to the jurisdiction of a British court in spite of the concessions that the Secretary of State has made tonight.
The Government have recognised that leave is needed to serve abroad. I wonder whether, in the terms of the amendment, a Frenchman who has been adversely affected in the United States by the anti-trust legislation could come to this country and pursue his claim against an American company in a British court.
I return to the matter of subsidiary companies. As we understand it, the problem still remains that American companies that are based in this country can go to their solicitors and legal advisers to change their names and become subsidiary companies in the United Kingdom. That, as I see it, would defeat the ends of the clause. It is vital, as I have said on other occasions, that the clause should be effective in the sense that it can be enforced in the courts. At the moment, it cannot be unless subsidiary companies are taken into account as well. Although I welcome the amendment as far as it goes, as we see the position it does not go far enough.

Mr. Charles Fletcher-Cooke: In my view, the clause goes quite far enough, if not too far. In any other form of action than this new, strange but never-

the less legitimate form of clawback, is there any precedent for bringing within our jurisdiction persons who are not within the jurisdiction of the court in the natural sense of the word? Maybe we ought to extend our juridical imperialism in the way that the Americans have done, but I should have thought that this was something new. Although I am not frightened of new things if they are necessary, it is nice to know, if this is new, what the limits of it are.
I should have thought that this was new, and I would therefore like to be reassured that the Government are happy that it can be achieved and that it is not merely what I think the lawyers call a brutum fulmen.

Mr. Eric Ogden: The phrase just used by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) went right over my head. Perhaps someone else can explain the meaning of it.
The Secretary of State, in his brief and lucid remarks, twice offered to say more if his hon. Friends sought further information. I hope that his gesture applies equally to the Opposition Benches. I think that the phrase he used was that "It had been represented to us in a note from the Embassy of the United States", or "from the United States". Can he tell us the date of those representations? Was it before or after the Committee proceedings? I think that it has some relevance. Did the representations help the right hon. Gentleman to change his mind after the Committee proceeedings, or are they remarks and comments that were passed and made available, quite rightly, by the right hon. Gentleman to all members of the Committee?
If the clause is to ensure that a person against whom the proceedings are brought is not within the jurisdiction of a British court—we are aiming at someone somewhere in the United States, I take it—is not the logic of that that the person bringing the charge could also be outside the jurisdiction of the British courts? If one can charge a person who is not within one's jurisdiction, one might also be legitimately thought to be able to accept charges against someone. Are these the limits that the right hon. Gentleman is seeking? It is not an empire-building clause, as the hon. and learned Member


for Darwen indicated, but it has in it a little of the spirit of
Wider still and wider shall thy bounds be set.

Mr. Crouch: I am very interested in the amendments put forward by my right hon. Friend the Secretary of State, because he has sought to strengthen what is already a pretty strong Bill in dealing with overseas countries with which we trade. We know that we are talking of one country in particular, where such protective measures as we are seeking to introduce tonight are necessary in the judgment of many of us, but I still feel that there is not enough strength here. Although my right hon. Friend has introduced a certain strength to the words of the clause, I believe that he has still left out the guts that are required to give real strength to the Bill.
We have spent a long time on the Bill in the House and in Committee. It is very important that we should not have wasted our time and that at the end of the day we should be passing a measure which will be strong enough to merit such dramatic action.
It is dramatic to pass a measure that is against our friends in the world with whom we trade. However, it is necessary for the Government to protect our interests by means of legislation because of certain onerous trading conditions that are applied, in return, on us by other Governments.
I am going back a bit. In Committee I sought to strengthen clause 5. I remind the Government that judgments for punitive damages in class actions have been delivered in overseas courts, especially in the United States. Unfortunately, these were not considered in Committee as they were omitted from the Bill. Nor have they been introduced by the Government at this stage. Although there is strength in what my right hon. Friend seeks to do in clause 7 in widening the Bill, there is no reference to punitive damages in class actions. I must ask my right hon. Friend to comment on this matter. I am not sure whether he will give me an assurance at this stage.

Mr. Deputy Speaker: Is the hon. Gentleman addressing himself to amendment No. 6 or to some other part of the Bill?

Mr. Crouch: I was addressing myself to amendment No. 6. Perhaps I was back-tracking a little, but no more than I felt I was able to do as long as I escaped your wary eye, Mr. Deputy Speaker.

Mr. John Prescott (Kingston upon Hull, East): I have two points to raise. One I shall deal with on Third Reading. The other point I raised on Second Reading. I was greatly concerned at the unique precedent created which was admitted by the Minister and which affected especially the shipping industry.
No other country concerned about this kind of countervailing legislation has gone as far as Britain. To my mind, not a great deal of justification was given on Second Reading or in Committee. I wonder whether the Secretary of State is able to help me as I am concerned with the consequences of this legislation. Frankly, I thought that it went too far before it went to Committee, but it has gone considerably further since it came out. It now, apparently, applies not only in Britain and within the jurisdiction of our courts but we have extended the precedent to areas outside our immediate jurisdiction and their laws. The report of the Standing Committee debate does not say for which countries we are responsible. The Minister said that the clause should
enable a body corporate incorporated in a territory outside the United Kingdom for whose international relations Her Majesty's Government are responsible to bring an action for recovery under the clause in the United Kingdom courts."—[Official Report, Standing Committee F, 6 December 1979; c. 61.]
I should like the Minister to give an indication of what countries he has in mind. From my inquiries in the Library, it seems that we are extending the clause to approximately 22 other countries or islands. The Committee was in some doubt whether we were interfering with legislation in other countries. The Bill will have the effect of changing the laws of other countries, although our responsibility in them is limited to their international relations. Presumably, that means that if we get into a squabble with America about her use of her laws to maintain a situation in which triple damages will follow from a guilty finding in an action under anti-trust legislation, those countries will also then be involved in an international incident, apparently without any consultation. I may be wrong.
Perhaps the Minister will tell us whether those countries were consulted by the Foreign Office and whether they have any objection to the House apparently passing laws that will affect the operation of companies registered in those countries. I see that the Secretary of State is showing disagreement, and, there fore, I shall not delay the House by pursuing the point.
When the right hon. Gentleman replies, I wonder whether he can tell me whether my interpretation of the Committee proceedings is correct. I have read the reports of the proceedings, and, as a layman, I found the legal interpretations in them difficult to understand. I do not say that in a critical way. I remember that there was some argument about whether it was a Committee for hon. Members or a lawyers' Committee when we were discussing who should be appointed to serve on it. The general view at that time was that it was a lawyers' Committee, and on reading the reports of the debates I believe that that was probably right.
Let me give an example of what I mean, taken from the shipping industry, an industry with which I am familiar. Many shipping companies register in countries outside our jurisdiction for tax avoidance reasons. If a shipping company has done that, are we now saying in the Bill that we shall give that company the privilege of making a claim, against American legislation, using British law, because of the relationship between ourselves and these dependent countries? In the example I gave earlier, the company concerned would be using our law to make a claim against the United States, in spite of the fact that it was registered in another country for tax advantages.
I hope that the Secretary of State can clarify that point and tell us why the sudden decision to extend this legislation was dealt with in Committee and why he was not aware of it before he introduce the Bill.

Mr. Ivan Lawrence: I see that during the debate on Second Reading I said that I was puzzled about how the clause was expected to operate as a matter of practice and how it could be enforced. I quote myself not to add authority to what I say but merely because it seems that the need to in-

troduce this amendment underlines the point that was made, not only by myself but by a number of my hon. Friends, during Second Reading about the puzzling nature and the apparent—even to lawyers, who, after all, are imaginative if they are anything—difficulty, if not impossibility, of enforcing it.
I ask my hon. Friend whether, in the time that has elapsed since 15 November, he has received any representations from the United States, the American Embassy or any representatives of authority to indicate that the purpose of the clause and the amendment—indeed, the Bill—might not be as necessary as we thought it was when we introduced it.
As was made clear when the Bill was introduced, we were most reluctant to introduce any measure that showed any antipathy towards our time-honoured friends, the United States, and it was merely because that country had refused to be reasonable about the matters with which the Bill deals that we had to introduce it. Can my right hon. Friend assist with any information that has been received since the date when these fears and doubts were expressed, which was a relatively short time ago?

Mr. Nott: With the leave of the House, I shall reply to the points that have been made. Perhaps I would be permitted to deal with the reaction from the United States in the short Third Reading intervention that I hope to make. It is easier to make the point there than in response to comments on a particular amendment.
I turn to the points made by the hon. Member for Kingston upon Hull, East (Mr. Prescott). Courts in this country can accept a case brought by a person only if he meets the tests set out in the clause. Those tests are that he must be either a United Kingdom citizen or a United Kingdom-registered company or be doing business in the United Kingdom. That does not give the widest-ranging powers that the hon. Member specified. If a Frenchman did business in this country and came within the definition of clause 6(1)(c)—
a person carrying on business in the United Kingdom"—
he would be able to make use of the clause and recover awards of multiple damages through our courts.

Mr. Ogden: "Business" can be a very wide term. Suppose that a French company was manufacturing violin strings in France, earthenware pots in some other country and lawn mowers in this country. If the Frenchman was sued, or got into difficulties in the United States about the violin strings or the earthenware pots, and his British company had nothing to do with it, could he still come to the British courts?

Mr. Nott: It would have to be the same company. That enables me to answer a point that was made earlier about why we had not widened the scope of the Bill to include subsidiary companies. I am told—I do not profess to be an expert in these matters—that in English law we assert the corporate separateness of the holding company and its subsidiary. It would offend the principles of our law if we permitted service against a subsidiary.
It has been said that this widening of the Bill would have greatly strengthened it, particularly clause 6, but it would have gone against the assertion of corporate separateness. It also would have taken us into an area to which my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) referred. We would have been getting perilously near the kind of juridical imperialism of which we are accusing the United States.
It is difficult to get this balance right. If we had not been concerned about causing some of the "offences" of which we are accusing the United States, I would have been happy to have added that broader aspect. I did not want to do that because it would offend against our existing principles and it would have put us in the position of the United States.

Mr. Prescott: I concede that this is a difficult argument. But the sensitivity of which the Secretary of State is well aware is the extra-territorial application. Let us take the example that he gave of companies that come together in a conference system. This was one of the weaker examples compared with the RTZ system, which was much clearer. In the case of the conference of shipping companies, if one of them is registered in one of the countries to which the Secretary of State has referred and it operates a conference system as a company in this country, it gets both the advantages of the tax havens of Bermuda or Hong Kong

and the privileges that go with the separate corporate identity here. This amendment will not get rid of the extra territorial application. The Secretary of State is carrying our legislation through to these countries when we have responsibility only for the company's international relationships.

Mr. Nott: I am not attempting to legislate against tax havens. The hon. Gentle man might find them offensive. I am trying merely to provide a remedy in this country to a body corporate, incorporated or carrying on business in the United Kingdom, against the award of what we regard as penal damages against that same company in the United States.
I accept that the hon. Gentleman may dislike some shipping companies using tax havens. That is a separate issue that I shall be happy to debate with him on another occasion.

Mr. Jeffrey Thomas: We are worried about the position where a company takes advantage of the clause and goes, for instance, to Hong Kong or the West Indies and is able to take advantage of the legislation. We are concerned that American companies, under the clause as drafted, could operate in this country through subsidiary companies and slip through the net. A coach and horses would be driven through the main purpose of the Bill.

Mr. Nott: I shall come to that latter point in a moment. I understand that criticism. I freely acknowledge that there may be ways in which the counterparts of my right hon. and learned Friends in the United States avoid a position where punitive damages would be recovered in Britain. I accept that. There are ways of avoiding many laws. That, no doubt, has provided—I mean it in the friendliest sense—fees for the hon. and learned Member for Abertillery (Mr. Thomas) for many years. There is nothing wrong in lawyers seeking a way round the law. That is part of their business.
I am not claiming that clause 6 will have universal application. We could have brought forward a clause that would have been even more fierce in its juridical imperialism than some of the practices that we are criticising on the part of the United States. It was the judgment of the Government, which my hon. Friends can agree or disagree with, to demonstrate


our strong disapproval of the principle of punitive damages. We wished to do so in a narrow sense. We do not wish to embark upon powers that we are criticising in the United States. We did not wish to pursue the matter in that way. We are open to the criticism that we have not gone far enough. It was a question of finding a balance, and we believe that we have the balance about right.
If we went as far as the hon. and learned Gentleman wishes us to go, we would be leading ourselves into difficult waters on our claims in defence of our companies which are subjected to some of these problems from American jurisdiction. We cannot have it both ways. We cannot claim that we strongly object to what the Americans are doing to our companies—and that is the basis of our political and diplomatic offensive—and at the same time take similar powers.
I am not posing as a great expert on these matters. I was hoping that the Bill would start in another place, where there are men of enormous experience who would wish to debate these matters in great depth. It so happens that the Bill came first to this place. I think that I have given an answer that is as clear and straightforward as possible.
In the end we return to the criticism of the hon. and learned Member for Abertillery—namely, whether it is worth having clause 6. I believe that it is, even on the narrow basis that we have suggested.

Mr. Jeffrey Thomas: I understand fully the sensitivities. I understand the apprehensions of the Government about offending our American friends. I share those misgivings and apprehensions as far as they go. However, having been attacked about the Bill, why do not the Government have the courage to say "We may as well be hung for a sheep as for a lamb"?

Mr. Nott: I have answered the question. I have said that it is a matter of judgment how wide we take the powers. Our judgment was that it was right to take them in the form in which they now appear. I cannot elaborate any further. The hon. and learned Gentleman is entitled to disagree or to vote against the Government. It was better to have a narrowly drawn clause 6—

Mr. Fletcher-Cooke: It is not narrow. It is enormous.

Mr. Nott: Some hon. Members are asking me to broaden it while other hon. Members feel that it is too wide. That may be an indication that it is about right.
My hon. and learned Friend the Member for Darwen asked about service outside the United Kingdom. In a number of international conventions, jurisdiction is conferred on United Kingdom courts. In those instances service is permitted outside the territory of the United Kingdom with the leave of the court. We are not going beyond what has already been agreed in a number of international conventions.
I am able to tell my hon. Friend the Member for Canterbury (Mr. Crouch) that we have considered the classes of judgment that come within clause 5. We consider that to include these classes of judgment would take the Bill far beyond its intended scope. I know that my right hon. and learned Friend the Atttorney-General intended to write to my hon. Friend to explain fully his reasons for not seeking to extend it even further. I am sorry that my hon. Friend has not received my right hon. and learned Friend's opinion. I can assure him that he will have it.

Mr. Prescott: The Minister has told us that he would have preferred the Bill to go first to another place, whose Members are more informed and able to give proper answers. That attitude does not fill me full of confidence.
It is resented on both sides of the House that the Americans are applying their legislation extra-territorially. That is fundamental. If we extend the influence of the Bill to other countries, that has an extra-territorial implication. If a colony is involved, we enact law in this place and it is applied in the colony. But we are talking about countries that have their own political institutions and law-making bodies.
We are referring to about 22 countries, including Hong Kong, Bermuda and the Cayman Islands—namely, the territories. I am told that in these territories the United Kingdom has some responsibility for international relations. I naively assumed that that meant that


we deal with relations with other countries on their behalf. But they make their own labour laws and laws on how their countries will be managed.

11 pm

Will the Secretary of State say clearly that in the countries where we have responsibility for international legislation we have a right to impose legislation affecting company law? We are passing legislation affecting their company law. It seems that we are changing a body of law that exists in those countries. If that is happening, it is an extra-territorial application of our legislation.

Mr. Deputy Speaker: We are on Report stage. The hon. Member is allowed to address the House on a second occasion only with the permission of the House. If this is an intervention, it is a fairly long one.

Mr. Nott: I understand that the hon. Gentleman is making an interruption in my remarks.

Mr. Prescott: If lawyers do not understand, what chance have we got?

Mr. Nott: We are not legislating in the dependent territories. This matter came up in Committee. The hon. Gentleman can read the debate. It was short. We are giving the opportunity for people in the dependent territories to make use of the British courts. The dependent territories are as they are described. We are not legislating for those dependent territories. We are merely saying that residents of those territories may have access to the British courts for the purpose of recovering punitive damages abroad. That is a different matter.
When the hon. Gentleman talked originally about 25 countries, I had not appreciated—I apologise for the fact—that he was referring to the British dependent territories. I thought that he was referring to countries such as France and Germany and others. I hope that I have answered the question. The matter was debated in Committee.

Mr. Ogden: Mr. Ogden rose—

Mr. Deputy Speaker: The hon. Gentleman has already addressed the House once.

Mr. Ogden: May I, Mr. Deputy Speaker, raise a point of order?

Mr. Deputy Speaker: The hon. Gentleman may raise a point of order provided that it is a point of order.

Mr. Ogden: The right hon. Gentleman said that if anyone wanted further information, he would make it available.

Mr. Deputy Speaker: Order. That has nothing to do with the Chair. It has nothing to do with the procedure of the House.

Mr. Ogden: By leave of the House—

Mr. Deputy Speaker: Does the hon. Gentleman wish to ask for the leave of the House?

Mr. Ogden: I wish to ask the right hon. Gentleman two fairly simple questions. He has had a complicated evening.

Mr. Deputy Speaker: Has the hon. Gentleman the leave of the House?

Hon. Members: No.

Mr. Deputy Speaker: The hon. Gentleman has already addressed the House once.

Mr. Nott: If the hon. Gentleman will remind me of the pieces of information for which he asked but which I have not given, I shall do my best to give him an answer. He raised a number of points. I thought that I had replied to them. There must be some point that he raised that I have not answered. Perhaps he can help me.

Mr. Ogden: I asked the whether the representations to which the right hon. Gentleman referred from the United States Embassy had been made before or after the Committee stage. I asked whether he agreed that it was logical that if British courts could entertain proceedings against a person in a third country, this meant that we were prepared to entertain cases from people in a third country. We want to protect British trading interests. I am not prepared to say that we should protect trading interests that have nothing to do with the United Kingdom.

Mr. Nott: I answered the second question clearly, I drew the hon. Gentleman's attention to clause 6(1)(a), (b) and (c), which answer the question. I did not answer the first question. I apologise. It was the United States diplomatic note No. 56 dated 9 November 1979. The


Second Reading was on 16 November. It was a United States diplomatic note commenting upon our general policy. I apologise for not answering that question. I hope that the hon. Gentleman is now satisfied.

Amendment agreed to.

Clause 7

SHORT TITLE, INTERPRETATION, REPEALS AND EXTENT

Mr. Nott: I beg to move amendment No. 7, in page 6, line 21, after 'to', insert 'the law or'.

Mr. Deputy Speaker: With this we may take Government amendment No. 8.

Mr. Nott: Towards the end of the Committee stage, the hon. and learned Member for Abertillery (Mr. Thomas) asked whether the definition of an overseas country in subsection (3) adequately covered the position of federal countries where there were political subdivisions within the federation and where those subdivisions had their own laws in addition to and distinct from federal laws. I agreed to consider the definition again to see whether any amendment was needed.
Clearly, our intention is that the reference to matters relating to an overseas country should cover all overseas countries and any constituent parts of such countries, including the laws of such constituent parts. Having considered the matter, I agree with the hon. and learned Gentleman that our intention should be placed beyond doubt. Therefore, I put forward these amendments, which are purely technical, for that purpose.

Mr. Jeffrey Thomas: I am extremely grateful to the Secretary of State for agreeing with the argument advanced by the Opposition in Committee. It seemed to us an important—inded, crucial—matter. It only goes to show that if one nags long enough and loud enough and persists long enough—indeed, one may even be right—one wins in the end.

Amendment agreed to.

Amendment made: No. 8, in page 6, line 22, at end insert
'references to the law or'.—[Mr. Nott]

Mr. Nott: I beg to move, That the Bill be now read the Third time.
As I stated on Second Reading, our objective in introducing the Bill was to reassert and reinforce the defences of the United Kingdom against attempts by other countries to enforce their economic and commercial policies unilaterally on us. I explained that, in effect, the practices to which we have taken exception had arisen from the extra-territorial application of United States domestic law.
I have already informed the House of the recent editorial in the Washington Post relating to this legislation entitled "Anti-trust: The New Imperialism", in which that famous newspaper concluded:
the Sherman Anti-trust Act is not a suitable instrument for the regulation of world trade. Maintaining international competition is the proper business of diplomats and negotiation, not federal judges and litigation.
I can give my hon. Friend the Member for Burton (Mr. Lawrence) a number of examples of articles in newspapers and obiter dicta by American lawyers and others who have found this measure interesting, and a great number of them have greatly approved of it on the principles enunciated in the Washington Post.
I am not aware that so far there have been many comments on the specific recovery provisions of clause 6. I have no doubt that that aspect of the Bill will receive fairly widespread comment in coming years. Up to the present time, I have not heard many comments on these provisions. Clearly, clause 6 will create the greatest amount of discussion in coming years.
We remain open to hear the remarks of experts in the United States on this provision. Other countries are certainly interested in this approach. I have already indicated that some would say that it goes too far. Others say—as does the hon. Member for Kingston upon Hull, East (Mr. Prescott)—that it does not go far enough. However, I believe that it demonstrates to other countries that this Government intend to be vigorous in puholding the sovereign rights of this country's companies and persons where extra-territorial application applies to them. In cases where punitive damages are awarded against British citizens, we feel that we must also demonstrate our dislike of this practice, and we have done so in a symbolic sense in clause 6.
Time alone will show whether clause 6 should be amended, widened or narrowed. We shall have to see how this legislation develops. I believe that it has been a necessary strengthening of the protection of British companies and persons against the extra-territorial applications of the laws of other countries. Clause 6 is symbolic and I hope that in some circumstances it will be effective. I ask the House to see how these measures proceed. With the leave of the House, Mr. Deputy Speaker, I shall answer any questions that might be raised.

Mr. Prescott: The Secretary of State made it clear that this legislation, with which I profoundly disagree, is a countervailing measure to the extra-territorial applications of other nations' laws. The legislation is designed to resist the enforcement of economic and commercial practices and laws on companies and persons within our jurisdiction. Most of the references in the debate have been to American companies, though the Bill does not single out any particular country. It refers to any country which takes action which the Bill is designed to prevent.
There is another country of which the Minister should take note whose economic and commercial policies—embodied in its law—are being imposed on British—

Mr. Deputy Speaker: Is the hon. Gentleman dealing with a matter in the Bill? That is the only relevant matter that can be raised during Third Reading.

Mr. Prescott: Any reading of the Bill makes it quite clear that this issue comes within its scope, Mr. Deputy Speaker, particularly in relation to clause 1, which is concerned with overseas measures affecting United Kingdom trading interests.
The Minister made it clear that commercial and economic laws of other countries imposed in areas of British jurisdiction would be resisted. Our attention has been directed mainly towards the United States, whose actions have led to this legislation, though the Bill is not concerned with a particular country. The legislation is directed against any country which adopts the specified practices.
I am attempting to alert the Minister to the examples of India. The application of such practices by India might be somewhat different, but the ends are the same. I hope that the Minister will take this example as a warning and give us his view later.
India, which is in trading relationship with Britain, is refusing to comply with what this Parliament has decreed, namely, that on British ships all seafarers of whatever colour will receive the same rate of pay. On a British ship British legislation applies, but the Indian Government are forcing their policy of cheaper wages on us, thus causing some difficulty.
The Minister, who knows about the case through me, might be able to indicate to the House what the Government's reactions are likely to be to the Indian Government's policy. That policy is in clear contravention of promises given by the previous Government.

Mr. Lawrence: I congratulate my right hon. Friend on the robust nature of the Bill, which is an indication that the Government are not prepared to tolerate infringements of the reasonable freedoms of our subjects to trade because of some aberration in the American laws which enable Americans to be imperialistic about their trading regulations.
Nevertheless, it is sad that we have had to introduce this legislation. After all, we have reached a time when, perhaps, we can be forgiving to the American colonies about their behaviour so many years ago. It might even have been an attractive matter to them that we have a strong currency, North Sea oil and determined and dynamic leadership. Some of us were, perhaps, entertaining hopes that maybe the American colonies would, once again, come back into the fold of the motherland.
This legislation underlines the sadness in the deterioration of this part of international legal relations. We have to protect ourselves. Although the Bill is self-protecting, it is not protectionist. One of its purposes is to liberate international trade. The effect of the anti-trust legislation in America is to discourage international trade and to deplete Western and international shipping.


Another effect of the anti-trust legislation is to favour State trading organisations against free enterprise countries because of the defence which is allowed to any international trading company to avoid the anti-trust legislation. Soviet Russia and the OPEC countries are given concessions and trading allowances which are denied to the British. As a result of this legislation, companies such as Rio Tinto-Zinc are being clobbered.
The Government have given clear notice to the United States that they are not prepared to put up with this. On that we should congratulate the Government. Because of every other sphere of Anglo-American relations, I hope that the day will come when the Americans relent and give up their attempt to spread their anti-trust legislation beyond their own shores. I hope that they will realise that they are treading on the toes of their friends. If the British cannot claim to be the close friends of the United States, I do not know who can.
I hope that the Bill will never have to be implemented or used to resist American anti-trust legislation. I know that the only people who will benefit from that are the lawyers. I hope that those who share that noble profession will not think that I am being critical of our powers and faculties. British lawyers have always wished to operate under the highest traditions of restraint and integrity and with tolerance to other legal regimes. I hope that the legislation will lead to an improvement in friendship between Britain and the United States and that the United States will, at long last, be reasonable and tolerant about the effects of its legislation.

Mr. Crouch: Perhaps I should have declared an interest long ago—and perhaps it may seem strange that I do so now, notwithstanding views that I have expressed in Committee and elsewhere. I happen to be a director of two American multinational companies. I am sure that copies of our proceedings have been sent to the United States. Nevertheless, it is in Committee that I speak my mind.
I do not agree with my hon. Friend the Member for Burton (Mr. Lawrence) that this matter represents a playground for lawyers.
Britain, with its practice in trading, has been a playground for American

lawyers and executives. They have been able to decide whether they can do anything to curb us, in their own interests. I have seen this happen. I speak as a business man who has seen active, high-powered executives trying to apply the decisions of the enormous administrative federal quangos which run the United States beneath the Washington emporium.
I have seen how the Americans have tried in their imperialism to make that work in other countries. I have had enough of it. I have worked with Americans, and I served with Americans in the war. I know enough about them to know that they would be the first to raise their hats and say "It is about time you noticed it. It is about time you did something. We take our hats off to you for recognising that we were pushing you as far as we dared."
The Americans are tough entrepreneurs in world trade, as the British were in the nineteenth century. They stop at nothing, and rightly so, until someone else stops them and says "Wait a minute. Why should your judgments apply in this country? They are not necessarily fair judgments, and they are not always judgments that British law smiles on benevolently".
My right hon. Friend the Secretary of State has been magnificent in steering this legislation through. It has not been happy for him to do so, but he has been courageous. I am sure that he has had to face up to some restraint from the Foreign Office. He must have been disturbed a little by the letter from the United States Government on this matter. But it has not deterred him from saying that something must be done to protect our trading interests.
I take off my hat to my right hon. Friend. He has steered the Bill through extremely well, with his customary lucidity and directness, which we welcome. Those qualities were combined with the generous wit that he always brings to these matters—even if he sometimes declares an interest that he does not know what it is all about. We welcome that, too.
I was a little disturbed that my right hon. Friend said that some of the measures in the Bill were symbolic only. I tried to trespass slightly in the debate on


amendment No. 6 to express the reservation that I would strengthen some areas of the Bill, particularly with regard to punitive damages, which no lawyer, no court and no judge in this country accepts. We do not like punitive damages, because they are retrospective and so on.

Mr. Douglas Hogg: We may not like punitive damages, but the concept is well known to the English courts and is sometimes invoked.

Mr. Crouch: I do not mind being interrupted by any lawyer, however distinguished his antecedents. I am a free man as long as I have the Floor and have your eye, Mr. Deputy Speaker. The great strength of this House is that it is a mixture of laymen and lawyers.
I wanted to make the Bill a little stronger on that matter, but I leave it at that because my right hon. Friend has travelled a long way in meeting all my objections and I know that he has further to travel, even tonight.

Mr. Ogden: The hon. Member for Canterbury (Mr. Crouch) has a rover style. His American friends might be very grateful that he is leaving it at that. We are all glad that he is still in the position that he occupied before he said what he did in Committee. How long he lasts after tonight may be another matter.
I do not know the hon. Gentleman's factories, but perhaps Airfix needed his style of management at Meccano. I think that there would have been a better result there if it had had it.
The hon. Member for Burton (Mr. Lawrence) spoke of friendship with the United States, and all of us, on both sides of the House, would entirely agree with what he said about that. Perhaps the Secretary of State can tell us whether the protection of British trading interests was on the agenda for the meeting between the Prime Minister and the President and, if so, where it figured.
I turn to one serious point. We are concerned about protecting British trading interests. I want to protect British trading interests in the United Kingdom and the trading interests of genuine British companies wherever they operate outside. I do not want to protect a company or persons simply because, though they are

operating in other parts of the world, they happen to have a British base.
The trade that we are protecting has nothing to do with British trade in the true sense. It might in the overall sense, but I do not want British courts to be used by a company which happens to be British based but whose operations that we are protecting are elsewhere and are nothing to do with true British interests. The Bill will now go to another place. Perhaps that point will be considered before it reaches there.
In Committee it was suggested that the Secretary of State should have discreation on clause 6, as in other matters, but the right hon. Gentleman made the point that there is no equivalent discretion in the United States. However, the information is not new, and I therefore ask what representations the United States Government have made since the Committee stage. Are they just sitting there waiting? If that is so, we should carry the legislation through.
We are determined to protect British trading interests, even though we do not like the way that we have to do it, and if the United States, having got this far, comes up with a solution, that might be the way to do it. We do not want any bother with big brothers or little brothers, but if action is needed, we should take it. Our concern must be to protect British interests within the United Kingdom and legitimate British companies wherever they operate.

Mr. Douglas Hogg: I shall be brief, as I know that my right hon. Friend the Secretary of State wants to catch a train. I have one small reservation about clause 5(3). My reading of the Bill suggests that it would cover contractual penalty clauses, and I believe that if a United Kingdom company agreed to a penalty clause with a foreign company, it could get out of its contractual obligations by relying on the provisions of clause 6, which I regard as being thoroughly undesirable.

Mr. Jeffrey Thomas: The Bill is the culmination of almost 30 years of what has unhappily become intense bitterness about United States enforcement of legal controls over commerce outside that country. On both sides of the House


there has been considerable concern about the intrusion of American anti-trust procedures in international shipping, aviation and, in particular, uranium trading. The defences erected by the Bill are similar to steps taken by other countries in that they restrict the provision of evidence for, and the appearance of witnesses at, United States anti-trust proceedings. However, the provisions to be found in clause 6 in relation to the recovery of punitive damages are without precedent in this country and abroad.
As the House knows, I have a certain disquiet that these matters could not have been solved by international agreement. As I sought to make clear on Second Reading, from an international standpoint I am not happy that criminal laws and courts should be used for these ends, although their use in that way serves policy objectives that are important to this country, and I am the first to realise that.
In another important sense, international law is badly served if legal institutions are converted into political and diplomatic policy makers and enforcers. The unhappy feature of the matter is that in the circumstances it cannot be helped, as many efforts have been made over the years to deal with the problem at diplomatic and other levels. Those efforts having dismally failed, we welcome the Bill with certain misgivings.
I understand that there are signs—I hope that that is right—that the Americans are rethinking the basis of their anti-trust legislation and jurisdiction, and the Bill may prod them further along that road. Two recent cases—Timberlaine and Mannington Mills—have cast doubt on the anti-trust test laid down in the Alcoa case of 1945—namely, whether the actions of a company affect those within American jurisdiction even if the company itself is outside it. In August, I understand, a Californian judge dismissed a consumer anti-trust action against OPEC, so one hopes that that indicates a new sense of realism.
There is it. The Opposition have had a large measure of accord with the Conservative Party in dealing with the Bill. I take this opportunity to thank the right hon. Gentleman for protecting my flanks at an early stage of the Committee proceedings. I was most grateful for that. We

are extremely grateful also for the fact that so many of our proposals have been taken on board by the Government and are now part of the Bill.
I conclude by repeating my reservation about clause 6, because without this clause the Bill would be nothing. Without the clause it would be a pointless measure, and I feel that the Government have not really had the courage, when they have come to grips with it, to grasp the nettle of the adverse application of American anti-trust legislation. Unless clause 6 is properly enforceable, the Bill will be a tiger without claws. We do not want to see that, and we hope that when the measure goes to the other place this aspect of the Bill will be considered.

Mr. Nott: With the leave of the House, I should like to reply to this short debate.
I recognise the concern of the hon. and learned Member for Abertillery (Mr. Thomas) about clause 6 and the opposite concern expressed by one or two of my hon. Friends. It is far from being a pointless Bill, even without clauses 5 and 6, in the sense that it considerably strengthens the 1964 Act, and I think that clauses 1 to 4 stand up and are important in themselves.
As the hon. and learned Gentleman said, there has recently been an indication that the American courts are beginning to show some concern about this area. He mentioned the Timberlaine case, and perhaps a new sense of realism will come into judicial judgments in the United States. We must see. I fear that one sometimes detects a trend on the part of Congress in the other direction, but I take the hon. and learned Gentleman's point.
We acknowledge that this is a difficult area, and I say to my hon. Friend the Member for Burton (Mr. Lawrence) that throughout the Bill I have sought to stress that we are merely responding to a situation of a very particular nature which has been developing over several decades and which in recent years has become more acute.
I stress again that the Government are, as ever, ready and willing to try, by discussion and negotiation, to resolve all problems underlying our commercial relations with the United States. We think that that is the right way to


proceed, particularly as both we and the United States share a common commitment to a generally liberal attitude to world trade.

Mr. Douglas Hogg: What would happen if a United Kingdom company agreed in a contract with a foreign company that, in the event of the United Kingdom company being in default, it would, by way of compensation, pay multiple damages? That would be a penalty clause and a perfectly usual one. In those circumstances, would the United Kingdom company be able to recover those damages?

Mr. Nott: I think that I should be most foolish to answer an extremely complicated question of that sort when winding up the Third Reading debate. Not being a practising lawyer, throughout the Bill I have been careful to choose my words when dealing with legal points. I shall, of course, give my hon. Friend an answer in writing as soon as I can. He has asked an important question, but I am reluctant to give an immediate answer.
We do not think that clause 6 will affect contractual penalties, since the judgment must be the result of a multiplier being applied to compensatory damage. I am not aware that contractual penalties are ever determined in this way, and, if they are, they are not enforceable in English law. I believe that that is the answer to the point made earlier by my hon. Friend.
I can say to the hon. Member for Liverpool West Derby (Mr. Ogden) that we have heard nothing from the United States since the Committee stage. No doubt we shall receive further representations. The hon. Member's anxiety that this should apply purely to British companies is understandable, but we must ensure that a Bill of this nature applies to those classes of persons to whom the law would generally apply, namely, those who are established, resident and operating here. It is British trade, but British trade must also include the subsidiaries of Ford, United States, operating and resident in this country. The point is that the bodies should be resident here, and with the single exception of the

dependent territories, a question which we debated earlier, we are not giving the right to companies from third countries to enter this country and take action for recovery under clause 6 in the way with which I think the hon. Member was concerned in Committee.
The hon. Member for Kingston upon Hull, East (Mr. Prescott) asked about a quite different matter. It is not for me to say whether it comes within the Bill. That is for you, Mr. Deputy Speaker. However, I am aware of the background to the hon. Gentleman's inquiry. It is, as he says, the fact that the Indian Government have never responded to the opportunity to raise the level to an agreed formula whereby the wages of their sea men might rise in the same way as that agreed with Pakistan and Bangladesh. I understand that the National Union of Seamen has a great interest in the matter of removing differential rates of pay. If the hon. Gentleman would like to make separate representations to us through the NUS or on his own, we should be happy to listen to them. It is a difficult question because I think that the hon. Gentleman knows only too well the position of the Indian Government and the reason why they are reluctant to agree with the formula. However, if he would like to approach us on this subject, we shall look at it again.
I conclude by saying that I am grateful to the hon. and learned Member for Abertillery for the friendly, co-operative and helpful way in which he has received the Bill. I thank my hon. Friends in particular for the help they have given on the Bill and for the amendments they have tabled, a very considerable number of which we have accepted. It is not a particularly easy measure. It is very complicated and technical. Some of my hon. Friends have much more experience of this question than I do. I believe that the Bill is broadly speaking, right, and I think that the time has come to take this step in defence of British interests trading overseas.

Question put and agreed to.

Bill accordingly read the Third time and passed.

WELSH AFFAIRS

Motion made,
That Mr. Alan Williams be discharged from the Committee on Welsh Affairs.—[Mr. Philip Holland.]

Mr. Nicholas Winterton: I wonder whether you can help us, Mr. Deputy Speaker. I am wondering what right Back Benchers have to speak on this matter at this time. An amendment has been tabled. The hon. Member for Nottingham, West (Mr. English), who has tabled an amendment, is not here. I wonder whether—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. I am not sure that the hon. Gentleman appreciates that we are dealing with the motion relating to Welsh affairs. The question is—

Hon. Members: Object.

Mr. Deputy Speaker: Objection taken.

CHURCH HILL HOUSE HOSPITAL, BRACKNELL

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]

Mr. William van Straubenzee: I greatly appreciate the courtesy of Mr. Speaker in allowing me to raise tonight briefly the question of the recently published report of the inquiry into Church Hill House Hospital, Bracknell. I am very obliged to my hon. Friend the Under-Secretary for his courtesy in being here at 20 minutes to 12 o'clock when I know that he has not only had a heavy day but wound up a major debate last night and therefore has had very great demands on his time.
It was on 3 November 1977 that there burst upon an astonished Berkshire world a major presentation in a local newspaper circulating in my constituency—the Wokingham and Bracknell Times—a sensational story containing allegations of matters going gravely wrong at this hospital. I hold in my hand a copy of the newspaper concerned, and the banner headline reads:
Why this hospital must be probed.

This arose from representations made at that time by the Wokingham constituency Labour Party, which wrote to the Secretary of State an undated letter which was received in his office on 2 November 1977. The letter stated:
we have reason to believe that there is strong evidence of victimisation of and discrimination against trade union members; and that there have been cases of the fabrication of documents for the purposes of discrimination and fraud; and that there have been incidents of violence involving both staff and patients at Church Hill House Hospital.
At that point in time, there was nothing in writing from the Wokingham constituency Labour Party other than the covering letter to which I have referrred. It was only on 22 December of that year that a written report was sent to the then Secretary of State. This is a matter of great importance, as I shall later show, in terms of the validity of the allegations made.
Placed behind that allegation was the full weight of the leader of the Labour group on Berkshire county council, who was also the prospective parliamentary candidate for the constituency which I have the honour to represent. He placed his full personal weight and responsibility behind these allegations. Of course, that by itself would not have been sufficient, but at the same time there appeared in this newspaper, to which I have already referred, a sensationally worded leader in emotive terms, which used phrases which could not be ignored. It wrote:
This must not be allowed cloud the main issue—and that is the allegation of acts of violence of a most unpleasant nature against mentally handicapped patients.
By anybody's standards, those are very serious words to use, and the combined effect of the full weight of a person in local public life and a sensationally presented local newspaper item meant that an inquiry was inevitable. It took two years to complete, it has now reported, and it cost some £60,000. Good heavens, every one of us in Berkshire can think of other admirable causes which could use that £60,000. The inquiry has shown every single charge to be baseless.
In 20 years' experience of this House, I have never seen a more careful report—I have it all here and have read every word of it—or a more exhaustive report, in which every single allegation is gone into. With one minor exception—concerning a member of staff who left almost


immediately afterwards and was not referred to in the initial allegations—it has shown that every single charge was baseless.
It just so happens, Mr. Deputy Speaker, that you of your kindness were in the Chair rather more than two years ago when Mr. Speaker kindly allowed me to raise this matter before. I spoke in sharp terms in support of the staff at that time, before the inquiry had had a chance of reporting.
All these charges stem from three people—Miss Sharon Warwick, Mr. Tony Onyewa and Councillor Terry Pearce. I say nothing about Miss Warwick and Mr. Onyewa. I say nothing about them not because I do not feel very strongly about them both but because their appeals against dismissal are at present being heard, and it must be in accordance with our normal procedure of this House that we say nothing that might affect a quasi-judicial hearing.
However, I can act in the matter of Councillor Pearce, as nothing judicial is involved. He was revealed, as a result of the inquiry, although it was not known before, to be behind many of the allegations and to be the author of an article in the extreme Left-wing journal Militant, which contributed greatly to the troubles when they were originally launched upon the hospital.
Mr. Furley, the leader of the Labour Party on the county council, must live with his conscience. He never consulted, to the best of my knowledge, anyone concerned with the hospital. He did not consult any of the senior members of his own party who had links with that hospital. To the best of my knowledge, he has never at any time visited the hospital or seen conditions for himself.
This unpleasant episode would never have succeeded if it had not had active support from the editor of the Wokingham and Bracknell Times. Let me give you a taste of the kind of way in which this unfortunate hospital was presentd. The paper says:
For weeks a team of reporters from this office has been investigating allegations of violence and other serious acts concerning patients and nursing staff.
The "team of reporters" is a figment of the editor's imagination. This is the

Walter Mitty world in which this man lives. His belief is that he is the editor of some great West End newspaper instead of being a Fleet Street failure. The truth is that one moth-eaten lad investigated this matter, one David Williams. If the editor had been more perspicacious, he would have realised that there was a relationship, which needed inquiry, between this boy and the principal witness, which meant that he was not a reliable person upon whom to found a story of this kind.
The report goes on:
I have read all the allegations which were brought to Alan Furley and I share his anxiety.
We now know from the independent inquiry that that statement is not true. He had not read the allegations as there were no written statements at that time. The statements were produced only later, namely, on 22 December. I fastened upon this point at once. I gave him every opportunity to retract, but he sought to maintain his position.
The essential point here is that he gave the impression that there were two independent sources of complaint—one had gone to the local Labour Party and one to him, separately. They were independent and separate. In measured terms, the inquiry, to which I have already referred, censored the editor for the way in which he presented this matter.
I took the matter higher than that, for I am a determined person when the rights of my constituents are concerned. I took it to a Mr. Howard Green, who was then the managing director of Thames Valley Newspapers. I assumed that if I went to a higher authority, I might find a bigger mind on the matter. Little did I realise. He wrote back to me saying that the editor was an experienced journalist with a fine sense of fair play and a deep sense of responsibility to the people in the community that he and his newspaper served.
I shall have great pleasure, before long, in telling Lord Thompson of Fleet how his family name and the name of the group of newspapers which he heads were smeared by these two men. They both showed that they were more concerned with circulation than with compassion and more concerned with profits than with patients.
The result was that they did untold harm and caused untold hurt to the administrative, nursing and medical staff of a hospital, all of whom have now been totally cleared of every allegation made against them, in measured terms after a most exhaustive inquiry.
If a certain note of bitterness is detected in my voice, it has been correctly detected, because I feel very deeply when it comes to my own constituents and their being unfairly attacked.
Before I pass on to what I finally want to say, I add a postscript. It is the habit of this particular editor to add the following at the end of his columns:
Wish-I-had-said-it-Department".
This is what he added at the end of the column on the particular occasion of which I have complained:
It is hard to believe that a man is telling the truth when you know that you would lie if you were in his place.
That was the postscript that he sought to put at the end of that column when he slandered the unfortunate staff of this innocent hospital.
It may be that many people will feel that this episode is now closed and for the sake of Church Hill House hospital I trust and think that it is. I am deeply obliged to Mr. Speaker for having given me the opportunity to place firmly upon the record the innocence of these admirable servants of the National Health Service. But the point I make is well illustrated by what has appeared in our newspapers this morning.
Exactly the same treatment, in principle, is now being applied to other constituents of mine at Broadmoor hospital, which is in the immediate vicinity. Two young nurses have given a public account of allegations that they have made, and this time it is being done with the support of an organisation called MIND. MIND is an admirable example of an organisation with a full-time agitator in charge. It is an admirable example of the new generation of—I use the words in inverted commas—"civil servant" who moves from organisation to organisation, dependent on noise for his success and his salary.
When I had dealings with Mr. Tony Smythe, when I was proud to serve at the Northern Ireland Office and he was

in the National Council for Civil Liberties, I had no doubts whatever that all his interests lay on the side of the Irish Republican Army. He is now applying precisely the same agitation in the MIND organisation. It pays, of course. An allegation is made and then one asks the person to prove his innocence.
What I seek to draw out in my concluding sentences is that the truth is that those who care for the mentally ill and mentally handicapped are especially vulnerable to accusations of this nature. Even when one cares for people who are mentally handicapped or mentally ill, there are times when some restraint is necessary, as I observed when I visited Church Hill House again last Monday.
I believe that the House should say that the accused are entitled to be assumed innocent and not be assumed to be guilty as they were in the case about which I complained, and as I suspect they are at Broadmoor hospital.
They are entitled to assume that those of responsibility who have complaints to make against them will make those complaints responsibly. Of course, they must then be looked into, but it is unreasonable and unfair that publicity should be given to them first. I asserted, rightly, that they deserved the support of the House and the public. That is why I am obliged for the opportunity to raise this matter and grateful to my hon. Friend for being here to answer me.

The Under-Secretary of State for Health and Social Security (Sir George Young): I am most grateful to my hon Friend the Member for Wokingham (Mr. van Straubenzee) for raising this debate on the matter of Church Hill House hospital and the report of the inquiry chaired by Mr. Christopher Beaumont, Q.C. As a Berkshire resident, I share my hon. Friend's unease about the way in which this matter was handled.
My hon. Friend's concern at the grave allegations—allegations which, as they developed, extended to include cruelty, violence to patients, lack of proper control of drugs, misappropriation of patients' money, the acceptance of bribes and the victimisation of members of staff—has been well known from the time when the allegations were first reported in the


Wokingham and Bracknell Times on 3 November 1977. While others were loud in their demands for instant public inquiry, my hon. Friend was quietly counselling caution and warnings of the dangers of premature assumptions. Not only had he—as he has made evident tonight—reservations about the editorial style of the Wokingham and Bracknell Times, but he rightly warned against the way in which a smear campaign can develop.
First, vague allegations are made—disturbing and distressing allegations—then it is asserted that "there is no smoke without fire" and then follow demands for a public inquiry. A public inquiry is a major and costly undertaking and it is also traumatic for those whose reputations are placed at risk. Any responsible authority must inevitably demand, before embarking on such a major undertaking, that at least a prima facie case of need be established. But when passions and anxieties have been aroused, as they were in this instance, the reasonable request of an authority that it be shown some evidence that something is wrong is taken as either prevarication or, even worse, deliberate evasion and an attempt to sweep the matter under the carpet.
All this my hon. Friend knew and said at the time when the first accusations were being bandied about in the late autumn of 1977. Now, two years later, he has been proved absolutely right. His warnings were timely, his fears were justified and we have only now, at considerable cost in time and money, laid to rest the rumours which were generated and given currency, as the report indicates, by a tiny group of individuals wilfully abusing their positions of trust as trades union representatives and as employees of the Berkshire area health authority.
My hon. Friend is completely vindicated on this point and the House is entitled to know something more of the background to these events, to hear how the inquiry came about and what were its principal findings, and to consider what may be the lessons for the future.
I have referred already to the publication of allegations about Church Hill House hospital on 3 November 1977 in the Wokingham and Bracknell Times. I do not propose to dwell on the part played by this newspaper in the whole

affair. My hon. Friend has taken appropriate action in referring the matter to the Press Council but I should like to repeat and endorse the remarks made by my predecessor, the right hon. Member for Manchester, Wythenshawe (Mr. Morris) during the debate in December 1977. He said that there was a need for the press:
to check out stories as far as possible before going to print on matters which are certain to give rise to public disquiet. Credibility is the journalist's stock-in-trade, and credibility suffers irreparable harm when readers are asked to give credence to reports of smoke without showing at least some clear evidence of fire".—[Official Report, 1 December 1977; Vol. 940, c. 880.]
Church Hill House hospital is a hospital in Bracknell for the mentally handicapped and has been used as such since 1930. Over the years since then it has progressively been upgraded and modernised and currently it cares for some 270 profoundly handicapped patients. It is situated in the east district of the Berkshire area health authority with which responsibility for management rests.
The Wokingham and Bracknell Times article of 3 November 1977 reported the allegations as being based on inquiries by its own staff and on statements made by Mr. Alan Furley, then prospective Labour candidate for the Wokingham constituency. Mr. Furley qualified his allegations and expressed horror:
that these things might be happening on our doorsteps in a mental hospital in Bracknell".
He referred to a letter which the constituency Labour Party had written to the then Secretary of State for Social Services, the right hon. Member for Norwich, North (Mr. Ennals), asking him to set up an independent inquiry. The allegations were brought to Mr. Furley's attention by two Labour Party members who worked at the hospital, said the report, and Wokingham and Bracknell Times reporters had been checking "worrying rumours" some weeks earlier.
I find it extremely regrettable that at no stage did anyone making such allegations see fit to use the recognised procedure for the investigations of complaints. Had anyone done so, a very great deal of time and money would have been saved and loyal and hard-working staff at Church Hill House would have been spared the tremendous strain and anxiety unfairly imposed upon them by subsequent events.
The newspaper report was the first intimation the area health authority had had that anything was alleged to be amiss at Church Hill House hospital. It is important, because I wish it to be clear that the health authority acted throughout with commendable expedition. The same day the area administrator wrote to the then Secretary of State to ask that the authority be informed of the allegations contained in the reported letter from the constituency Labour Party to the Secretary of State. The then Minister of State replied to the area administrator on 16 November 1977 enclosing a copy of the letter from the constituency Labour Party to the Secretary of State, but on investigation it was found to be completely general in its allegations. It said simply that there was reason to believe that there was strong evidence of victimisation, of discrimination against union members, of fraud, falsification of records and violence involving both staff and patients. No specific evidence that the authority could investigate was contained in that letter.
Not until 12 December was there any evidence whatsoever to substantiate the allegations sent to the area health authority, and then it was submitted by the constituency Labour Party. The area health authority responded by announcing on 6 January 1978 the setting up of a panel of members, with an observer from the community health council, to investigate all the allegations, except those of violence to patients. These latter the authority had asked the police to investigate as early as 11 November 1977, even though no evidence on which an investigation might be founded had then been available. By January 1978, with some specific allegations now available, the area health authority decided to postpone the proposed panel of inquiry because the police had extended their investigation to cover all the allegations, with the exception only of those concerning victimisation of union members.
Over the next few weeks the pressure for a public inquiry grew more intense, and on 9 February 1978 the Bracknell Times, submitted its own evidence to the authority.
At that time the area health authority came to accept the need for an inquiry that was more far reaching and demonstrably independent than that ini-

tially proposed. It therefore decided that an independent legally qualified person should chair the panel of inquiry. On 11 April 1978 the Director of Public Prosecutions informed the chairman of the area health authority that, following the extensive police investigations, no proceedings were to be instituted under section 126 of the Mental Health Act 1959, but one former employee would be prosecuted for obtaining money by false pretences—a charge of which that employee was subsequently, on the direction of the judge at his trial, found not guilty. That decision freed the panel, to commence its investigation.
Within a few days it became apparent that the members of the authority who were to have served on the panel of inquiry would not be able to devote the sufficient number of consecutive days to working at the pace which Mr. Christopher Beaumont proposed. The arrangements were therefore amended and two outside, independent assessors, sat with and assisted Mr. Beaumont throughout the period of the inquiry.
The terms of reference were: "To investigate and report upon allegations made in respect of Church Hill House hospital."
The inquiry was expected to last about eight days and it commenced on 15 May 1978. In the event, the inquiry heard evidence on 65 days, the last one in June 1979, and the final report was published on 19 November 1979.
The cost to the health authority of the inquiry was approximately £60,000, and this sum roughly approximates to the entire allocation of general growth money to the Berkshire health authority for the current year. To the extent that the health district may have to make economies affecting the level of services available to patients, the cost of this inquiry will have exacerbated the authority's problems and reduced the services available for caring for patients.
The report uncovered a general picture of a very few people who abused their responsible positions as employees of the authority and manipulated their union positions, initially to gain members at the expense of another union, but largely for purposes, and I quote Mr. Beaumont:
which appeared neither to be in accordance with the wishes of the vast majority of NUPE


members in Church Hill House, nor in accordance with the general policies of NUPE. Things were done purporting to be on behalf of NUPE which in reality had nothing whatever to do with trade union matters.
The allegations made by the local NUPE representatives are far too numerous to chronicle for the House, and they tended to shift and vary as the inquiry proceeded. None the less, in his summary Mr. Beaumont touches on between 80 and 90 separate allegations made at one time or another which were found to be untrue, unjustified and without foundation. The only exceptions were one allegation of rough handling of a patient involving a nursing sister which was properly investigated at the time, and malpractice in allowing three unqualified nurses to hold drug keys. There is, how ever, no evidence that the keys or drugs were misused.
Turning to the future, two people named in the report remain suspended on full pay. It is for the Berkshire area health authority to determine what action it will take, but the House will wish to know that, in the light of Mr. Beaumont's report, the authority convened on 27 November 1979 a disciplinary tribunal which recommended that both should be immediately dismissed. Both employees subsequently exercised the normal right of appeal.
What are the lessons to be taken from this sorry episode? One lesson to be learnt is that hospitals—especially hospitals caring for the mentally ill or the mentally handicapped—canbe gravely damaged by unjust and unfounded criticism. I should like to join my hon. Friend in paying tribute to the dedication and devotion of the staff of Church Hill House. They carried on with their duties while reckless rumours and allegations were circulating and later while they were investigated.
Staff in such hospitals undertake work which is demanding and difficult, and to build up constructive relationships between staff, patients and the community is a task that takes time, skill and devotion. Such relationships and reputations are of the utmost value. The public must have confidence in our hospitals

and the staff need the reassurance that they enjoy public confidence and understanding. Those who, while posturing as guardians of the public weal, make public allegations which are completely without foundation can do lasting damage to the morale of the whole institution.
One lesson to be learnt from this sorry episode is that a fresh look is needed at industrial relations in respect of the NHSNo management structure, guidance from the centre or new procedure can ensure that difficulties will never arise. But I believe that we have taken three substantial steps towards ensuring that staff are in future better able to work together against a stable background for the better care of patients, and there is no place in the NHS for those for whom the care of patients is not a first priority.
We have for a start, made it clear in our consultative paper "Patients First" that a management structure at amore local level should be established. Some of the benefits we see flowing from such a structure are greater team spirit among NHS staff, less feeling of remoteness and alienation from management and a closer involvement in the raison ďetre of the NHS—the care of patients. We have issued a circular on health service management if industrial relations break down
It is important that both staff and management should know where they stand in the event of industrial disputes, and I am sure that a more open and honest relationship will have beneficial effects on NHS industrial relations generally. Thirdly, and perhaps most importantly, the Government believe that it is an urgent necessity to establish workable guidelines for local disputes procedures in the NHS. Proposals are now with the—

The Question having been proposed after Ten o'clock on Thursday evening, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at eight minutes past Twelve o'clock.